It might give some people a very uneasy feeling, but that doesn’t change the fact that American teenagers could play a role in several different investments. Teens have migrated to computers, phones, and gaming consuls as an everyday form of socialization.
While teenagers will never “make or break” a company like Apple Inc. (NASDAQ:AAPL), they could definitely play a role in how the company performs. Statistics show that approximately 25% of teenagers own a smartphone and use it not only for calling/texting but also for accessing the Internet. In 2012, there was a 14% increase in smartphone usage among teenagers when compared to the previous year.
The iPhone accounts for approximately 50% of the total smartphone market share in the U.S. but less than a quarter of the market share worldwide. Apple Inc. (NASDAQ:AAPL)’s iPhone accounted for approximately $83 billion of revenue in 2012. Let’s be conservative and say that only 15% of those iPhones were sold to teenagers. — that’s $12.5 billion, which represents almost 8% of Apple Inc. (NASDAQ:AAPL)’s total revenues in 2012. Remember, that’s 8% of Apple Inc. (NASDAQ:AAPL)’s total revenues being generated by teenagers through just one product. Due in large part to the struggling stock, Apple Inc. (NASDAQ:AAPL) is very cheap as it shows an 11.7% FCF yield.
Google Inc (NASDAQ:GOOG) is another company that receives billions of dollars of revenues from teenagers. Generation C (the newest generation) spends 74% more time viewing YouTube videos on their smartphones than they did just one year ago. 76% of young adults (ages 18-34) own smartphones, and Google Inc (NASDAQ:GOOG) owns approximately 70% of the global smartphone market share with its Android devices. Just how relevant is YouTube? Well, they see over 33 million users per day and nearly 1.4 million every hour. In fact, if YouTube were a country, only China and India would be larger.
Google Inc (NASDAQ:GOOG) generated nearly $50.2 billion in revenue throughout 2012, and almost 18% of that is from Android devices or YouTube. So, approximately $9 billion was derived from these two areas, which are seeing solid growth from teenagers or young adults. Google Inc (NASDAQ:GOOG)’s FCF yield is 5.2%, and they show a P/E of 24.6. It is not incredibly cheap, but for a stock that has increased nearly 24% in the past year and more than 64% in the past five years, it’s not too bad of a bargain.
Facebook Inc (NASDAQ:FB) is a company geared toward teens and young adults. Let’s be honest, I know very few people over the age of sixty that have a Facebook Inc (NASDAQ:FB) account. However, despite the lack of baby boomer and older Facebook users, the site still attracts nearly 1 billion active monthly users — the same claim that YouTube can make. Here are a few mind boggling numbers to think about when investing in this company:
93% of teens ages 12-17 go online
73% of teens are on a social network
The average teen has 201 Facebook friends
37% send messages to friends every day
86% of social network using teens comment on a friend’s wall
88% of parents know that their teens typically use the Internet to communicate with people they don’t know in the offline world
So, here is the point. Teens swarm to social networking sites and use them to communicate. Without teens and young adults, where would these companies be? Not at 1 billion users a month, I know that much. Facebook’s Mark Zuckerberg was just voted the best CEO of 2013 — so far. In three years their revenues have increased nearly 258%, and their stock has risen nearly 31% in the past six months.
The Foolish Conclusion…
So, there you have it, three companies that teens could have a fairly significant impact on. It has become obvious that teens love social media and mobile devices. They may not be able to invest in companies like we can, but they can certainly play as big of a role in their success. Don’t ignore the young people and their effect on these companies. I would be far more comfortable investing in a company like Google or Apple Inc. (NASDAQ:AAPL), just because they have more of a competitive advantage than that of Facebook.
Tyler Wofford has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, and Google.
