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Young Users Favor YouTube & Snapchat, Should Facebook Bother?

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Facebook’s (FB - Free Report) dominance in social networking seems to be under threat as young users are reportedly abandoning it in favor of Snap’s (SNAP - Free Report) Snapchat and Alphabet’s (GOOGL - Free Report) YouTube. In fact, the core Facebook app is also losing young users to its photo-sharing app Instagram.

Per Pew Research Center’s latest survey, Facebook’s popularity among U.S. teens aged 13 to 17 has reduced considerably. Only 51% of the responders said they use Facebook compared with 71% in the 2015 survey, when it led the social media platforms.

The platform is far behind YouTube, which tops the list with 85% of teens saying they use it, followed by Instagram with 72% and Snapchat with 69% users.

The surging popularity of Snapchat and Instagram is evident when compared with the 2015 survey, when the platforms were used only by 41% and 52%, respectively, of the teens surveyed.

Further, Snapchat emerged as the most-used platform with 35% respondents admitting to visiting the platform frequently. YouTube came second with 32%, followed by Instagram with 15%.

Facebook trailed badly with just 10% of the teens admitting to using its services, while the share of Twitter (TWTR - Free Report) was even lower.

Facebook Trails in Other Surveys As Well

Per Piper Jaffray's 35th semi-annual Taking Stock with Teens survey, Snapchat is the most preferred social networking medium among teens. Reportedly, 45% of the respondents said that they prefer using Snapchat, up from 39% the year before.

Snapchat was followed by Instagram, which enjoyed the support of 26% of the respondents, up 3%. Twitter, which recorded 9% votes in the survey, was preferred over Facebook, which declined 2% from 2017 to 8%.

Moreover, eMarketer estimates that the number of U.S. Facebook users in the age group of 12 to 17 fell 9.9% in 2017. Further, eMarketer anticipates a 5.6% decline in Facebook's monthly average user base for the 12 to 17 age group this year and a 6.5% drop in 2019.

eMarketer expects Instagram’s U.S. user base to increase 13% this year to almost 105 million, while Snapchat is anticipated to 9% to 87.5 million.

What’s Causing the Shift?

Snapchat and Instagram are the most popular and trendy messaging and social media apps in the United States. These apps are mostly dominated by teenagers and their most adored celebrities and brands.

The popularity of these applications, especially among teens, can be primarily attributed to ephemerality. Photos/videos and text sent to friends via them disappear after sometime. Moreover, an interactive style of chat developed by the addition of attractive features has caught the fancy of teens.

The “cool” quotient of these apps is helping them draw users. As the apps are less popular among the older demography, teenagers are less likely to bump into their parents or worse grandparents on the same network. This is what makes them more attractive to youngsters.

Moreover, Snapchat, in a bid to expand its user base and gain an edge over Facebook, is reportedly launching Snapkit platform for third-party app developers that would enable them to offer login using Snapchat credentials. By letting users add Bitmoji avatars on other platforms, it is expected to become more popular among teenagers.

Should Facebook Worry?

Facebook is the world’s largest social media platform with 2.2 billion users. The company’s undying efforts to uphold user privacy coupled with its ever expanding product portfolio will continue to drive growth.

Notably, eMarketer projects Facebook’s overall U.S. user base to continue to expand over the next few years. We note that despite the Cambridge Analytica scandal in the March quarter, Facebook’s monthly active users were 13% higher than what the company witnessed in the first three months of 2017.

The social media giant is also undertaking several initiatives to expand its reach beyond the saturated domestic market and increase penetration in under-penetrated developing regions. The launch of Facebook Lite application in more countries including developed nations and the introduction of Express Wi-Fi App backs this fact.

Facebook’s huge user base combined with that of Instagram makes it highly attractive to advertisers. The company’s strength in online and mobile advertising revenues is the key growth driver. Moreover, its mobile ad business will continue to remain a major contributor to its advertising revenues.

Zacks Rank

Facebook and Snap currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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