Facebook Isn’t Cool Anymore

Facebook is so dominant that the company essentially is social media. However, Facebook has fallen far behind in the “coolness” curve with teens.

When investors hear the words “social media,” Facebook Inc. (Nasdaq: FB) is the most likely company to come to mind. After all, Facebook is everywhere these days. You likely have a Facebook page, as do many of your friends and family — all of whom use it to share thoughts and opinions, and generally keep in touch and share experiences.

Because of this, Facebook has grown into a multibillion-dollar global phenomenon in the past decade. The company has a market value of roughly $435 billion, and it rakes in average revenue of about $7.1 billion per quarter. Right now, Facebook is so dominant in the marketplace that the company essentially is social media.

Well … at least for anyone in the millennial generation or older. As with all things, our children rarely follow exactly in our footsteps, and, as the chart below shows, Facebook isn’t quite the social media giant with the incoming generation:

Facebook is so dominant that the company essentially is social media. However, Facebook has fallen far behind in the “coolness” curve with teens.

(Source: Statista)

While Facebook made solid inroads with teens with its acquisition of Instagram, it has fallen far behind in the “coolness” curve with the younger generation. According to a survey by Piper Jaffray, Snap Inc. (NYSE: SNAP) is positioned to become the “choice of the next generation,” with 39% of teens responding that Snapchat was their favorite social media network to follow.

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Before everyone jumps ship on Facebook and floods into SNAP stock, there is still one key factor to remember: money. While teens are overwhelmingly choosing Snapchat over Facebook, they still lack the spending power of their parents.

Yes, Snap currently sports a market valuation of more than $27 billion, but that valuation is mostly speculation at this point, with investors betting on rising ad revenue down the road — mostly as a result of charts and data like those above. But the company is still expected to record a loss of 21 cents per share in its first quarterly report as a publicly traded company this Wednesday.

All things considered, Snap is certainly worth putting on your radar right now. It could take a while for the company to adequately monetize its rising fame among the postmillennial generation, but with Facebook still foundering among teens, Snapchat has the inside line on the next major group of online spenders.

Regards,

Joseph Hargett
Assistant Managing Editor, Banyan Hill

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