Teens Don’t Appreciate Reach of Facebook: Pachter

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Oct. 31 (Bloomberg) -- Michael Pachter, managing director at Wedbush Securities, explains why a decline in teens does not matter to Facebook, looks at the overall impact of ads in news feeds and compares the appeal of Facebook and Twitter to youth. He speaks on Bloomberg Television’s “Market Makers.”

Conversation of a young teen exodus from the newsfeed.

They do not like the ads that they are getting.

I get the sense that this does not bother you.

Not at all.

I cannot believe you through a hallway and softball.

Investors are spooked by this.

I said hocus-pocus.

It is crazy.

I think people missed the point.

Facebook really has very little utility for people.

It is to connect with people that they see every single day.

If you think about teenagers, until they move a way from home for school or the workforce, they see all of their friends at school every single day.

They live within five miles of their entire universe.

They do not know anyone other than relatives that live further away.

Kids at school see each other every day.

I'm not sure i buy the argument that they would not follow them on facebook.

I see kids, my daughter included, who text kids that are 10 feet away.

Being in the same space means -- does not mean that you are not committed getting online.

I have children that are the same way.

They're on instagram.

They are sharing all day long.

We will win these people off of instagram and onto facebook when they get into college.

I know my kids will do that because they will go off to college and missed their friends.

They will connect again.

Facebook was created on a college campus by guys who wanted to figure out who a girl was.

It spread to other campuses because all the people at harvard had friends at other campuses.

Then it spread to adults.

I wondered why her chapter never responded to my friend request.

Now i know.

This is a tiny thing that sends the stock down.

I think facebook will be fine.

Kids do not get why we use it.

They are always amazed when i reconnect with a college friend that i have not seen for many years.

It happens about once a month.

They wonder how it is possible.

They do not get it.

I stock exploit friends on facebook -- i stalk ex- boyfriends on facebook all the time.

They do know so much about you.

Will this start making adults say that they are not comfortable?

I think this is true for a small percentage of the population.

A lot of people are more savvy about how they use facebook.

I only like things that i actually like.

I do not automatically like everything.

I get ads in my newsfeed that i love.

I click on every single one.

I own two porsches.

They do their job.

Wow.

In all seriousness, is it at all possible that the young kids who are more savvy than the rest of us are just the leading edge here?

The facebook user base of older teens and twentysomethings and thirtysomethings may grow similarly discontented with the ads?

Maybe everyone does not manage their fees -- their newsfeed as well as you do.

Obviously, it is possible that will happen.

I think kids do not appreciate the use of -- the utility of facebook.

It gains utility as you get older and have friends that are not near you.

If you do not have their phone number or e-mail address and you cannot text them, you find them on facebook.

You find your old boyfriends.

You cannot do that with a cell phone.

So you are saying that facebook is for old people?

18 and older, sure.

Older people identify it.

My 13-year-old think those are old people.

When they are away at school, they will use facebook.

It seems like more people are using instagram or twitter.

With all of the information on facebook, it seems like too much.

I do not care when people put those updates.

I think that they are similar to facebook.

Comparing total -- comparing twitter to facebook does not make sense.

Twitter is a place to get news.

Facebook is a place to follow people that you do know.

There's a big difference.

You should be using both.

Kids will use both as they age.

My kids are on twitter.

They think that is interesting because they can follow lady gaga.

That is cool and that is what they want to.

I cannot follow that question, but you have this ipo happening at twitter.

I spoke to investors on the roadshow at the event.

They're the same investors that were going to facebook events last year.

Are they not both going after the same wall street money?

Something like this may be changing the course of where the money will go.

They are.

I think twitter has a big uphill battle.

Twitter is a young person site.

It is the opposite of facebook.

I think people get twitter if they are under 40. people over 40 have no clue what twitter is.

I would say that most of you guys do not use twitter effectively.

You have one million viewers, how many twitter followers?

If you do not have one million, you're doing something wrong.

Only emily chang has more than i do.

I do not know about that.

Tom keene is a big twitter celebrity.

I think that twitter is an education effort, where facebook was not.

I do not think that investors get what twitter is.

We hear them quite often say they are not the same thing.

One more question.

Back to the beginning of the conversation, are we not seeing a saturation point here?

It may be the ultimate risk of facebook.

You can only put so many ads in the newsfeed.

Whether you're young teens are older folks, facebook runs out of room to leverage the newsfeed with ads.

The only way to generate more revenue is by sending a more users.

Yes, you're right.

I think that is very good point.

Of course they are approaching saturation.

The only way to generate more revenue is with more frequent engagement of users.

Higher ad rates would also work.

The users keep going up and the supply remains constant.

Ad rates will go up too.

They introduce a new product every month and it is just a matter of time before one of those products turns into something.

I actually do not worry about it.

We're fixated on newsfeed.

We are not worried about anything that is location-based, which is coming.

We're not worried about video, which is coming.

Give them time.

They are in the first inning of growth.

Do not bet against horny guys from harvard.

That is the take away here.

Thank you very much.

Our west coast correspondent is also with us from l.a. i'm going to take you to d.c. now.

There are restrictions being lifted on using tablets and smartphones on planes.

Peter is an rdc bureau.

-- our dc bureau.

You soon will be able to use your tablet and smart own on airlines.

The faa administrator is walking through this change.

It is a big change for travelers

This text has been automatically generated. It may not be 100% accurate.

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