Teenagers: Facebook Is Not Cool

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Facebook (NASDAQ:FB) is now grappling with the Catch-22 of the hyper-accelerated technology business model. Typical industry cycles may encompass several years — if not decades — of drawing board innovation, real growth, maturity, and ultimately, decline. Technology revolutions, however, may swing between boom and bust within eighteen months.

Interestingly, aggregate consumer behaviors out of teenagers and young adults are often leading indicators foreshadowing secular shifts within the technology economy. Wall Street analysts, of course, would define the teenage term “cool” as goodwill. Teenagers, however, associate cool with exclusivity. At the moment, Facebook is far from exclusive and the stock is priced for perfection. Ironically, seasoned traders may start taking their cues from teenagers and also exit stage left out of this company.

The Facebook Mission

On October 30, 2013, Facebook released Q3 2013 financial results. Be advised that Facebook fiscal years generally parallel calendar years. To open the report, Mark Zuckerberg, Facebook CEO, reiterated his mission to “connect the world.” At the time, Zuckerberg also announced an ambitious goal of bringing an additional 5 billion people online through Facebook within the near future. For now, Facebook lists 728 million daily active users (or, DAUs) and 1.19 billion monthly active users (or, MAUs) through September 2013 as highlights. DAUs and MAUs have logged respective 25 percent and 18 percent year-over-year increases.

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