Facebook shares spiked recently with stellar earnings results, but plummeted back down on word teenagers may be falling out of love with the social network.
The world’s leading online social network reported profit of $425m in the quarter that ended on September 30, compared with a loss a year earlier.
The earnings figures showed soaring advertising revenue, nearly half of it from smartphones or tablet computers.
Facebook shares leapt about 15% and remained aloft until chief financial officer David Ebersman mentioned in an earnings call that internal analytics indicate decreased use of the social network by “younger teens.”
Shares dropped back near the trading day closing price of $49.01 after the earnings call.
“That would probably do it,” independent Silicon Valley analyst Rob Enderle said of share price suffering due to fears it is losing the devotion of teenagers.
“That market is incredibly fickle,” he continued. “You don’t want to see a trend that kids no longer think Facebook is no longer the place to be; that it is now their dads’ service.”
The notion that Facebook is falling out of favour with a budding generation prompts worry about the company’s future earnings potential no matter what fiscal guidance executives provide.
“The kids are Facebook’s seed corn, and you don’t want to lose that,” Enderle said.
Ebersman cautioned that Facebook engagement by young people is tricky to measure because users claims regarding ages are not validated. The social network used internal tools to get a sense of activity by teenagers.