Piper Jaffray analyst Michael Olson told investors that his firm's 36th semi-annual survey of 8,600 teens showed that Facebook's (FB) Instagram and Snap's (SNAP) Snapchat continue to dominate adoption, and that core Facebook use is declining across age cohorts. Citing the survey, Olson added that Amazon (AMZN) Prime adoption “once again increased materially,” while Apple's (AAPL) place as the dominant device brand among teens remains intact.
FACEBOOK USE DECLINING, INSTAGRAM OVERTAKES SNAPCHAT: Piper Jaffray’s Olson told investors that his firm's 36th semi-annual survey of 8,600 teens showed that Facebook's Instagram and Snap's Snapchat continue to dominate adoption and that core Facebook use is declining across age cohorts. Further, the data showed that Instagram has overtaken Snapchat as the most-used platform by teen monthly active users, and continues to lead social platforms as a channel for brand communication, Olson noted. However, the analyst pointed out that the survey results appear mixed for Facebook as the company is best positioned in the mobile-native space, but needs to execute to ensure monetization is strong on new platforms, especially with increasing emphasis on Stories and Messaging. Olson reiterated an Overweight rating and $200 price target on Facebook’s shares.
PRIME ADOPTION INCREASED, APPLE REMAINS DOMINANT: In a separate note to investors, Piper Jaffray’s Olson said his firm's semi-annual survey also showed improved Amazon mindshare and that Prime adoption "once again increased materially." Of all respondents, 74% indicated their family had a Prime membership versus 70% in the spring 2018 survey and 66% in fall 2017, the analyst highlighted, adding that he believes Amazon's "massive scale is crucial” as it makes it very difficult for competitors, such as Walmart (WMT), to change consumer habits. Olson reiterated an Overweight rating and a $2,100 price target on Amazon’s shares. Regarding Apple, the analyst told investors the survey showed that the company’s share of smartphone ownership was unchanged. Of respondents, 82% have an iPhone, the highest percentage Piper has seen in the survey. The iPhone may have room to move higher, however, with 86% of teens anticipating their next phone to be an iPhone, Olson added. Further, the analyst noted that the Apple Watch was the top smartwatch among teens, garnering 16% share, with the Samsung (SSNLF) Gear next on the list at 2%. He views the survey data as a sign that Apple's place as the dominant device brand among teens remains intact. Olson reiterated an Overweight rating and a $250 price target on Apple’s shares.
POSITIVE FOR CONSOLE PUBLISHER GROUP: Citing his firm’s 36th semi-annual survey, Piper Jaffray’s Olson highlighted that video game console ownership was up, with 83% claiming to own a current generation console or expecting to buy one. Spending on video games also increased, from 13% of male teen budgets in spring 2018 to 14% currently, he added. Further, Olson pointed out that a growing number of teens watch others play games via YouTube (GOOG, GOOGL) and Twitch, while the number of teens who play mobile games fell from the spring survey. The analyst views the data as positive for Activision Blizzard (ATVI), Electronic Arts (EA) and Take-Two (TTWO), and neutral for mobile game companies Zynga (ZNGA) and Glu Mobile (GLUU).
‘SURPRISING’ SHARE GAINS FOR CROCS: In a research note of her own, Piper Jaffray analyst Erinn Murphy said her firm's 36th semi-annual survey of 8,600 teens across 48 states showed that video games and food "remain multi-year share gainers within teen wallets," while beauty generally continues its uptrend. She pointed out that the most notable brand gainers have been VF Corp.'s (VFC) Vans, Adidas (ADDYY), Lululemon (LULU) and "surprisingly" Crocs (CROX). Teens' favorite restaurant is Chick-Fil-A followed by Starbucks (SBUX), while Chipotle Mexican Grill (CMG) "gained share sequentially," Murphy added.
PRICE ACTION: In afternoon trading, shares of Facebook, Amazon and Apple are up about 1% to $155.32, $1,784.68 and $221.06, respectively.
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