What your Facebook addiction means for investors

Smartphones are driving social media growth.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's a good chance that you're addicted to using Facebook (NASDAQ: FB) on your phone. In fact, 61% of 7,446 polled iOS and Android users said they use their Facebook mobile application every day, according to a study published last week by IDC and Facebook.

The majority of participants in the study say that they check their News Feed constantly. But the phenomenon isn't affecting Facebook in isolation — LinkedIn (NYSE: LNKD) and Twitter are beneficiaries as well. What does this mean for investors in the social space? Spoiler alert: It's good news.

The Facebook phenomenon
The increasing amount of social engagement taking place on connected devices is due to two major factors, says IDC:

  1. A universal need to feel connected with others.
  2. The widespread adoption of smartphones.

Facebook, LinkedIn, and Twitter have created platforms for people to engage, share, and connect on these pocket-sized computers. The result? "Social engagement via phones has become mainstream," concludes the report.

Smartphones are very important and critical tools "for connecting with friends, family, and colleagues every day," the IDC study revealed. Most respondents polled keep their smartphone with them all but two hours a day, on average. One out of every four smartphone owners can't even recall when the last time was that their smartphone was not close to them.

As smartphones are being adopted in droves, platforms that are effectively connecting people on mobile devices are benefiting. IDC notes that it expects smartphone users in the U.S. to grow from 155 million in 2012 to 181 million and 222 million in 2013 and 2014, respectively.

Which companies will benefit?
Facebook will undoubtedly see favorable effects from the growing use of smartphones and tablets. It overwhelmingly receives the most attention from smartphone users, with an average number of daily sessions on Facebook of 13.8 and an average session length of 2:22 minutes. But LinkedIn should benefit, too.

LinkedIn received little attention in the study, and rightly so — its main purpose is to enhance people's professional network; this is something we just don't devote daily attention to. But it still managed to notch some impressive stats:

  • 4% of smartphone owners use LinkedIn when they are at a live event.
  • 2% while they are at a meeting or class.
  • 2% when they go out to eat or get drinks.

These stats are impressive when you consider the fact that LinkedIn has only 202 million members, compared to Facebook's 1.06 billion monthly active users.

Foolish takeaway

There's a host of reasons for the astounding growth of social platforms like Facebook, LinkedIn, and Twitter. But the link between mass adoption of smartphones and a global need for connectivity undoubtedly remains a major driving force. With worldwide smartphone adoption still growing by leaps and bounds, Facebook and LinkedIn should continue to benefit.

Unsure about the future for these social media giants? Two of Australia's most promising small companies are still flying under the radar. Discover these two exciting ASX investments in our brand-new special FREE report, "2 Small Cap Superstars". Click here now, it's free!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article, written by Daniel Sparks, originally appeared on fool.com.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »