Facebook’s fear comes into focus: Teens are fleeing

Facebook Q3 Earnings Analysis

Facebook’s third-quarter results blew out Wall Street expectations as the company earned $0.25 per share on $2.02 billion in revenue. Though it wasn’t quantified, there’s one number that’s scaring Facebook, and investors: teens using the service less. The company noted that ended the quarter with 1.19 billion monthly active users, 728 million daily active users. But a key segment, teenagers, are engaging with the service less. CFO David Ebersman said that while engagement from U.S. teens was stable from the second to third-quarters, he did note “We did see a decrease in daily users, especially among younger teens.”

Fleeting teen engagement has always been a concern for Facebook as other social networks including Snapchat, Twitter and Facebook-owned Instagram become more popular. CEO Mark Zuckerberg has said in the past that Facebook is trying to become a utility, and is past the “cool” stage at this point in the company’s life span.

“People assume that we’re trying to be cool,” Zuckerberg said in an interview in September with The Atlantic. It’s never been my goal. I’m the least cool person there is. We’re almost 10 years old so we’re definitely not a niche thing anymore so that kind of angle for coolness is done for us.”

While CFO David Ebersman noted that there isn’t an accurate way to measure teen activity, he did say that Facebook has started to develop ways to look at this.

This issue is part of the reason why Facebook purchased Instagram last year, and we’ve heard rumors about Facebook looking at Snapchat and possibly the reason Facebook agreed to meet with BlackBerry recently, as BlackBerry focuses on its BBM messaging service.

Given the stock’s violent reaction to Ebersman’s comments about teens and declining use, this is a big issue for Facebook, and one that’s likely to persist for some time.

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