Young people might not love Facebook, but investors continue to like it

In 2014, investors might wonder how Facebook will profit off a changing demographic.
Posted By Sonali Basak   |   Dec. 31, 2013 at 12:18 PM
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Facebook's stock is up more than 100 percent for the year after having a bumpy 2012, when it began trading publicly. It rose in December to the S&P 500 index of the largest U.S. companies.

A Pew Research study released Monday shows that Facebook remains the most popular social network overall, and 71 percent of online adults are using the service compared with 67 percent the year prior. Facebook, Instagram, Twitter, Pinterest and LinkedIn all saw gains in usage this year.

The highest growth in Facebook users is people over the age of 65. Use among younger generations dropped by 2 percent from last year, as they become more attracted to burgeoning media like Snapchat. They also use Twitter, which showed a soaring public debut this year, and Instagram, which is owned by Facebook.

Instagram's usage among people ages18 and 29 spiked to 37 percent of the population up from 28 percent in the year prior. It recently released a photo-messaging service similar to Snapchat, though messages do not disappear.

Investors worry that Facebook misses out on a prime demographic, and want to see its popularity translate into its financials.

Facebook and Twitter are both restructuring to find greater returns from ad revenues. Twitter is not yet profitable, but Facebook showed profits on revenues expanding nearly 60 percent in the most recent quarter from the prior year.

Facebook isn't upping the amount of ads on newsfeeds but announced a trial on newsfeed video advertising, a growing form of promotion. It also shows promise in mobile, becoming the second biggest mobile advertising company behind Google. ComScore reports that Facebook, along with Instagram, captures more mobile time spent than YouTube, Pandora, Twitter, Yahoo, Pinterest, Tumblr, AOL and LinkedIn combined.

As the younger generation moves away from the growing social media giant, its profit outlook might just keep the company popular on Wall Street.

[The Motley Fool] [NBC] [Forbes] [Forbes]

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