THE START OF SOCIAL MEDIA DECLINE
Social media is undeniably entangled in today’s modern era, as more and more people become highly dependent on it not just for entertainment, but also for gathering information as well. However,since last year, the decrease in its users has become remarkable, along with the number of installs it gets per year. A study also revealed that individuals are spending less time on these apps. The analysis conducted covered nine countries in six continent, wherein it was unveiled that people’s addiction to these kinds of pastimes is slowly waning.
Reason for the usage drop
Of all sites, the shrink is more noticeable on Facebook. Surprisingly, market analysts associate this user slump among youngsters, as many of them are preferring other applications offering more private conversation features. A s of May 2016, age range of 25-34 year olds represented the standard demographic for the website, which mixes with statistical data showing that engagement for individuals in their 20s to 30s have deteriorated as well. This is because they devote less time on the internet given busy schedules.
Twitter, meanwhile, has been having problems with their stock even before, which resulted to a lag in engagement growth. Although they have touted having reached 320M users, most of these have been inactive for so long that their display pictures have been changed to a default egg photo.
Adding to the woes are people’s anxiety on losing their jobs or becoming the center of online ridicule through their erroneous posts. There are instances that some employees have been sacked for sharing memes deemed as offensive by their employers. This has resulted to more people becoming secretive about posting anything that might initiate controversy thus, resorting to new communication offerings that foster more private interactions.
Wise investors do not only look at a sector’s current standing. Since they also measure its performance in the midst of looming economic crisis or changes, they are bound to choose one that has less value in the future but can easily adapt and maintain its figures in the future.
Due to the rapid slowdown in social media firms, investors should be getting worried, since this phase mirrors the fall of prominent tech giants in the 90s due to their high valuation which cannot be supported by their fundamentals.
The trend of exceedingly high values are remarkable if you compare Google and Facebook as well. While the former is not having disengagement issues, its P/E ratio is at a modest 29.4, which is considered as lower than the industry average. Meanwhile, the latter’s soaring 70.4 ratio is an indication that it might be overvalued, especially given that their enterprise multiple during the previous year’s second half is at 32.4.
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