Is Facebook Losing Its Luster?

Facebook-thumbs-upAnswer: Yes and no.

Facebook has weathered the initial IPO problems and is faring well. Its financial performance has been boffo and their recent quarterly sales and profit were strong. Facebook’s revenue rose 60% to $2.02 billion. Roughly 90% of that came from advertising.

Most importantly, mobile ads generated almost 1/2 of its ad revenue, up from 41% in the second quarter. Facebook now comprises roughly 16% of the worldwide mobile ad spending in 2013, according to eMarketer, up from 5% in 2012. So the initial questions in 2012 about Facebook’s evolution to mobile have now been answered. As a result, its stock has now risen to new heights at roughly $50/share, far above the original IPO $38 price—also remember that the share price had plummeted into the teens initially, so this is a major comeback.

Furthermore, Facebook has over 1 Billion users now worldwide (that’s 1 Billion Austin Powers), so it’s a worldwide mega brand.


There are storm clouds on the horizon. Facebook was built on the appeal to a younger audience, those in their teens and 20s. Long before their parents (and now grandparents) and businesses used Facebook, the teens/20s audience fueled its growth. Now they are not so enamored.

Facebook has finally admitted what marketers knew to be true–that its youngest users are losing interest

“Our best analysis on youth engagement in the US reveals that usage of Facebook among US teens overall was stable from Q2 to Q3, but we did see a decrease in daily users, specifically among younger teens,” said Facebook CFO David Ebersman. This admission contradicted Mark Zuckerberg’s earlier proclamation about the strength among teens.

Recently a survey from Piper Jaffray indicated that Facebook is no longer the  most important social network among teenagers. 23% of teens now deem Facebook the most important site, down from 42 % a year ago. Twitter, the financial darling of the moment, now has snuck past Facebook among teens, as shown below.


So what does the future hold? None of us know. But since social media usage among teens/young adults are the leading indicators of broader trends, we see issues developing. But shed no tears for Facebook. They are “too big to fail”. Then again we’ve heard that before.

More Strumings

Leave a Reply