Millennials delete Facebook. Should investors be worried? – The fool

After the news broke Facebook& # 39; s (NASDAQ: FB) The Cambridge Analytica debacle, the #deletefacebook movement circulated on the Web. According to a recent internet poll by Pew, nearly half of US Facebook users aged 18 to 29 have removed their phone application in the 12 months preceding the June survey. In total, 74% of US Facebook users have changed their privacy settings, taken a break in the app or have it completely removed.

These numbers are surprisingly high, and that would suggest that Facebook has a major problem. But investors should not worry that Facebook is losing half of its most valuable user base. The results are not great, but nothing more radical than what we have already seen.

The details of Pew's investigation

The Pew survey was conducted from May 29 to June 11 this year. It was a few months after the news of Cambridge Analytica. It was also in the second quarter of Facebook.

Overall, 26% of those surveyed said they removed the Facebook application and 42% said they took a break to check the platform for several weeks or more in the last twelve months. Younger users were more likely to take action than older users. This is understandable, especially after we have not realized the importance of the care that Facebook gives to the confidentiality of the data.

However, the removal of the application does not mean that users have ended with Facebook for good. Users could have several reasons to remove the application, privacy issues to will improve productivity or simply having to free up space for other applications or music on a device. Users can connect to Facebook on the web and reinstall the app later.

Indeed, Facebook took a few blues in the second quarter, but nothing in its results suggests that it loses nearly 26% of users in the United States. In the second quarter, the company reported fixed figures for daily and monthly active users in the United States and Canada. It has lost users in Europe, mainly because of the impact of the general regulation on data protection.

Engagement is a major concern

Although Pew's survey results do not mean that users are completely fleeing Facebook, the answers suggest a declining level of engagement. Combined with recent changes in Facebook's news feed, investors may see a sharp decline in engagement levels.

With Facebook keeping its load of ads, commitment is essential to increase ad impressions. Facebook reports year-to-year changes in ad impressions during its revenue calls, but provides a global number that also includes impressions on all of its properties. Still, it's the best measure we have for user engagement.

In the last quarter, advertising impressions increased by 21%. Management added that the growth was "mainly due to ads in the feeds on Instagram and Facebook". With 11% of daily growth of active users on Facebook, this suggests that Facebook keeps the levels of engagement on the platform.

Facebook spends a lot of public relations messages to encourage users to stay on its platform. In addition, the company has significantly increased its security spending to ensure that situations like Cambridge Analytica do not happen again. In addition, Facebook spends a lot on its video platform, Watch, to encourage users to spend more time watching videos on Facebook and to invest in other ways to engage users. All of these combined efforts should help move the needle forward in favor of Facebook.

Although Pew's survey figures suggest some issues that the large social network is facing, these problems do not appear in the results reported by Facebook. Of course, investors should continue to monitor the number of active users and the growth of ad impressions each quarter.

Adam Levy owns shares of Facebook. The Motley Fool owns shares and recommends Facebook. Motley Fool has a disclosure policy.