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Facebook Inc. (Nasdaq: FB) is starting to get a taste of what it means to be the king of the social media hill.
Small and more nimble competitors with novel ideas have sprung up and begun to entice young users away from the No. 1 social media platform - a bad omen for Facebook stock, which 11 months after its IPO still trades 29% below its offer price.
According to Piper Jaffray's annual "Taking Stock of Teens" survey, teens are spending less time with Facebook and more with a vast array of alternatives.
The survey showed that just 33% of teens consider Facebook "the most important social network" compared with 42% last year.
Last month, the creator of social photo album app Albumatic, Adam Ludwin, conducted a focus group of users under 25.
"They gave me the typical teenage response: 'We're bored with Facebook,'" Ludwin told Business Insider.
Anyone who doubts how quickly a social media company can become yesterday's news need only look at MySpace, a once-dominant social media site that lost a third of its users in 2010 mostly as a result of Facebook's growing popularity.
"History is not on Facebook's side when the trend starts to move in the wrong direction," Piper Jaffray analyst Gene Munster told MarketWatch.
Facebook absolutely cannot afford to lose its grip on its youngest users, who often foreshadow which social media are on the way up - or down.
Although Facebook has 1 billion users worldwide, the company has struggled to monetize this vast audience; hence, lackluster performance of Facebook stock.
The company has experimented with various forms of advertising and more recently has taken steps to make its software more mobile-friendly, but with limited success.
The transition to mobile has worked to a degree - that's certainly where users are headed - but ad revenue from mobile devices is less than that from PCs, and Facebook has just 13% of it.
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