Facebook shares dropped by over 20% last Wednesday due to a big revenue miss and a future outlook of higher costs and further slowdowns in profit.
Mark Zuckerberg’s wealth fell by $16 billion in one day. That’s got to hurt. The darling of social media saw no growth in North America and lost a 1 million users in Europe.
Was a big drop on this stock something traders should have seen coming? Well, the fact that Zuckerberg personally sold $3.8 million shares in the last 3 months, was the first big red flag. Why sell if the future is rosy?
Allowing its customers personal data to be used by third parties (Cambridge Analytics) has left a bad taste and could be at least one of the reasons why new users are turning their back on Facebook.
This episode forced Facebook to allow its users more control over their privacy. However, the more private it’s users become the last exposure they have to online ads which is where Facebook makes its money. Are we heading towards a monthly subscription service?
Facebook also has a problem with the under 25 market who are turning their back on the social media platform favouring Instagram and Snapchat. It is hard to grow if you can’t interest the next batch of young people.
Maybe this move is overdone and the clever people at Facebook will find the right solutions to improving their image and attracting the next wave of social media users.
Join us for our next live webinar on the 6th of August.
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