Facebook Inc. (NASDAQ:FB) Follows Twitter Inc (NYSE:TWTR)
Facebook Inc. (NASDAQ:FB) tumbled on Friday along with other social media stocks including LinkedIn Corp (NYSE:LNKD) and micro-blogging site Twitter Inc. (NYSE:TWTR). While Facebook Inc. and LinkedIn Corp fell 4% and 1.9%, Twitter Inc. experienced tremendous selling pressure as 60.42 million shares exchanged hands on Friday, against its 30 day average volume of $19.52 million shares.
Twitter’s stock closed at $63.75, losing $9.56 from its previous close as the stock went through the biggest intraday fall of 13.04% since its launch. The fall was quite expected for the stock which rose too fast to the high of $74.73 against its listing price of $26 per share. Equity analyst Ben Schachter of Macquaire Capital also cut his rating for the stock from “neutral” to “underperform” level with a price objective of $46.
Worry For Facebook
While many reports earlier released the findings that teens are moving away from the world’s most popular social media platform Facebook Inc. (NASDAQ:FB), a recent multi-country study, Global Social Media Impact Study also supports similar findings. The study revealed that teens are not migrating away from Facebook because of vows surrounding privacy intrusions or data gathering, but because of the availability of more popular mobile apps that allows teen alternative social networking opportunities.
Among the rival mobile apps, teens are increasingly turning to Snapchat, Twitter, What’sApp and even Facebook Inc. owned Instagram for that reason. The study reported that Twitter Inc. (NYSE:TWTR)’s micro-blogging platform is perceived to be much easier to use among the teenagers.
And the Legal Threat
Mobile transition is not only parting apart teen users from Facebook Inc. (NASDAQ:FB) but could also be a significant reason for potential lawsuits against the social media giant. Recently the U.S. District Judge Robert Sweet ruled in favor of plaintiffs to sue Facebook Inc. and its banks over the 2012 IPO. The allegation is that the company should have disclosed projections about how mobile transition might affect its future revenues.