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Facebook Is Losing Teens

forbes.com

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Re: Facebook Is Losing Teens

#31

Post by XorNot »

logn wrote: post #30
gohrt wrote: post #18

Earlier quoted context omitted.

I don't know Facebook's details, but in theory another possibility to lower P/E: "Stop pouring money into expansion, to lower expenses and increase bottom-line earnings." For example, Amazon could certainly do that, since they spend heavily on expansion

But the flip side is, as soon as they stop investing in expansion, the market will immediately start to wonder if their P/E is justified and might cause a decline in price. The signal from the market to Facebook now is that the shareholders want to invest in growth. And given FB's dominance, size, and talent, it's hard to argue otherwise. Facebook could still change a lot, and I think we're only seeing the beginning…

That's a pretty generic signal - shareholders always want to invest in growth. The problem Facebook has is that ridiculous P/E makes them a bad buy if you would be happy with dividends, which means growth is their only option.

Re: Facebook Is Losing Teens

#32

Post by XorNot »

yeukhon wrote: post #14

Teens are attracted to Twitter, Instagram and Vine. They like these mini social network where they could gain followers by posing interesting tweets or photos or videos. Youtube's top celerity usually started their channels when they were teen (high school, freshman). Certainly getting your channel popular now is harder, so the best way to get attention is either by posting photos or posting a 6-second videos. Vine a…

Vines is going to crash hard suddenly IMO. At it's core it's just not versatile enough for anyone to actually try and become "popular" from Vines videos - what you do their, you can do on YouTube as well, but with more versatility. You can't do much with 5 second videos as a limit - but the 5 second movie/10 second movie etc. was a format that people were using on YouTube well before Vines.

Re: Facebook Is Losing Teens

#33

Post by fauigerzigerk »

gohrt wrote: post #18
wavesounds wrote: post #11

Facebooks is priced at 240X Price to Earnings. If they start losing users or even stop growing its hard to imagine how that PE ratio continues to makes any sense. Even with an increase in mobile revenue its still less then desktop revenue and users are certainly flocking to mobile too which is a double wammy. So facebook has to transition to making more money per user if its user base stops growing. Otherwise you're…

I don't know Facebook's details, but in theory another possibility to lower P/E: "Stop pouring money into expansion, to lower expenses and increase bottom-line earnings." For example, Amazon could certainly do that, since they spend heavily on expansion

That is an important aspect, but let's consider the P/S (price/sales) ratio to gauge that savings potential:

Facebook: 22.3

Google: 5.9

Amazon: 2.3

(source: money.msn.com)

Of course, comparing to Amazon doesn't make sense. Retailers are always going to have very low margins and low P/S ratios. But comparing to Google does make sense. Assuming Facebook's potential margins are similar to Google's, Facebook would have to have incredible sales growth or incredible cost cutting in order to lower their P/E significantly.

I think it may be possible for Facebook to achieve that goal. People will put up with incredible levels of spam and harrassment in exchange for not losing "friends". So they might be able sell four times as many ads as they do now and cut costs dramatically on top of it.

Re: Facebook Is Losing Teens

#34

Post by snogglethorpe »

argonaut wrote: post #12
cookiecaper wrote: post #2

As the article stated, it's difficult to overcome the "grandma factor" -- once something becomes so pervasive as to be near-universal, even among persons unlikely to be clued in, its cool factor is diminished if not completely obliterated. Some groups actively crave differentiation, and teenagers seeking to assert their independence are prominent among them. It can be difficult to express and explore in the way teena…

As a 19 year old, I will say that from my perspective, this "coolness" factor is seriously overblown and misunderstood. Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old. Facebook was always a highly addictive and vital necessity - a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a l…

> Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old

At the time Facebook was cool, it wasn't open to 14 year olds...

Re: Facebook Is Losing Teens

#35

Post by CoryG89 »

Myrmornis wrote: post #28
psbp wrote: post #16

Earlier quoted context omitted.

This would make sense if they actually offered much utility. Even Google+ has them beat when it comes to compelling features.

Err, what? If I closed my facebook account I would lose virtually all contact I have with every friend I have made other than the person I live with and a few people who live near me and my family. How the hell is that not utility?

It's not really Facebook offering utility though. They offer the same features every other site trying to be the "fabric of the internet" offers and some would say not as much. It just so happens that everyone you know has a Facebook at the moment.

Re: Facebook Is Losing Teens

#36

Post by chetanahuja »

argonaut wrote: post #12
cookiecaper wrote: post #2

As the article stated, it's difficult to overcome the "grandma factor" -- once something becomes so pervasive as to be near-universal, even among persons unlikely to be clued in, its cool factor is diminished if not completely obliterated. Some groups actively crave differentiation, and teenagers seeking to assert their independence are prominent among them. It can be difficult to express and explore in the way teena…

As a 19 year old, I will say that from my perspective, this "coolness" factor is seriously overblown and misunderstood. Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old. Facebook was always a highly addictive and vital necessity - a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a l…

"a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a large amount of social interaction"

And according to the article (and my own, admittedly limited, survey of teens and "tweens" I know), that utility value doesn't exist anymore. Now, you could argue that the thing they are moving to is also facebook under a different name (instagram)... but I suspect it would be just as ephemeral as a "required" social network as the facebook itself has proven to be.

Re: Facebook Is Losing Teens

#37

Post by wavesounds »

MichaelApproved wrote: post #26
InclinedPlane wrote: post #13

Earlier quoted context omitted.

The only way that valuation made sense is if facebook managed to capture an enormous fraction of all worldwide ad revenue. That always seemed extremely unlikely to me.

OP is only giving half the story. FB earnings are, in a sense, artificially low. They are dumping money into expanding and growing. FB wants good earnings but, right now, that's not as important as growing users and use. Of course there will always be money spent on growth but to what extent. When they go from dumping money into growth, P/E will be more meaningful in the typical sense.

Investing in growth is only an excuse for high PE if you are growing though, if the trend in the article continues and they maintain this PE ratio then maybe they're throwing good money after bad

Re: Facebook Is Losing Teens

#38

Post by argonaut »

chetanahuja wrote: post #36
argonaut wrote: post #12

Earlier quoted context omitted.

As a 19 year old, I will say that from my perspective, this "coolness" factor is seriously overblown and misunderstood. Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old. Facebook was always a highly addictive and vital necessity - a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a l…

"a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a large amount of social interaction" And according to the article (and my own, admittedly limited, survey of teens and "tweens" I know), that utility value doesn't exist anymore. Now, you could argue that the thing they are moving to is also facebook under a different name (instagram)... bu…

I actually think the value increases as you get older (through college-aged), as your social networks fragment and split off.

When I was in high school my FB friends were mostly people I saw day-to-day anyway, so FB merely consisted of keeping in the loop with the social activity of people I would see in person every day anyway. So I can totally understand why once-core FB activities are moving to Instagram/Snapchat/Twitter, as a sort of unbundling function (in the sense that each service separately does a slice of FB).

But now that I'm off to college, FB is the only way I keep in meaningful touch with people from HS, people I've met randomly over the years, people from summer programs, etc.

Re: Facebook Is Losing Teens

#39

Post by vdaniuk »

hawkharris wrote: post #27

As more teenagers gravitate toward online social networks (if not Facebook, then Instagram, etc.), I'm concerned that not enough of them will feel lonely. I recently watched a Louis C.K. interview about young people and technology, which struck a chord with me. I agree that adolescents benefit from a sense of boredom and isolation because it encourages them to cultivate stronger in-person social networks: http://team…

I am flabbergasted. Adolescents benefit from isolation? And you're citing a comedian? Care to cite some serious sources?

Re: Facebook Is Losing Teens

#40

Post by ghaff »

snogglethorpe wrote: post #34
argonaut wrote: post #12

Earlier quoted context omitted.

As a 19 year old, I will say that from my perspective, this "coolness" factor is seriously overblown and misunderstood. Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old. Facebook was always a highly addictive and vital necessity - a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a l…

> Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old At the time Facebook was cool, it wasn't open to 14 year olds...

A bit blunt but, yeah. Facebook was arguably a lot more cool when you at least needed an .edu address to get on. (Or a bit before or after that point depending on your perspective.)
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