Facebook Is Hemorrhaging Young Users — Is It a Warning Sign To Sell the Stock?

woman browsing on Facebook
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Teens and young adults are losing interest in Facebook, according to the social media platform’s internal research. “Time spent” for U.S. teenagers on Facebook was down 16% year-over-year and young adults were spending 5% less time on the social network. The number of young adults on Facebook in the U.S. has declined 2% since 2019 and is expected to fall an additional 4% over the next two years, Bloomberg reported.

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This report was among the internal documents collected by Facebook whistleblower Frances Haugen, who went public in October claiming that Facebook prioritized profit over user safety and security. The report also showed that:

  • Young people are spending less time on the platform
  • Fewer teens are signing up
  • Many new teen accounts are duplicates
  • Users across all age groups are posting less

It’s unknown why these changes are happening and why product changes haven’t made a difference. Haugen indicated that all of these variables suggest that Facebook hasn’t been transparent with investors and advertising clients about its business. According to Bloomberg, user growth and engagement are the company’s most important selling points for investors and advertisers. More Facebook users mean more targeted advertising; the more users interact with Facebook, the more likely those users are going to see ads.

Rumors are also circulating that Facebook is planning to change its company name as it focuses on building a “metaverse,” Forbes said. Reports suggest that it is meant to show that Facebook is more than just a social media platform. The name change could be formally announced at the annual Connect conference on October 28, or sooner.

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James R. Bailey, professor of leadership at the George Washington University School of Business, told Forbes that this is a “corporate restructuring move that allows for more favorable financial reporting and distinct investment opportunities.” Facebook’s market value is close to $1 trillion, according to Bloomberg, and revenue has risen to nearly $30 billion per quarter.

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Last updated: October 25, 2021


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