You might have read many articles lately about Facebook losing 30% stock value in the market since July 2018.
But why has facebook lost its stock value in the last four months?
The key contributing factor is the public scandal Cambridge Analytica that made headlines this year, it revealed that personal data of 50 million Facebook user profiles were harvested without the users consent and used for some for “political purposes”.
It’s also said that Mark Zukerburg’s interference “Instagram” led to the sudden resignation of the co-founders Kevin Systrom and Mike Kriege, in September.
Due to this widespread criticism investors are losing faith in the social media giant and also thinking of moving out of the company.
Facebook is taking steps to address criticism that its platform has been hijacked by bad users, but investors are bailing.
But I think though the company is losing money, it’s still gaining popularity amongst the youth and there has been a significant growth in the users. Facebook is widely used for sharing news, personal information, selling products & services and a lot more.
The main reasons I see where Facebook lost its grip and led to severe criticism are:
- Data Leak & Privacy Scandals
- Fake news
- Too many apps and services
- Monitoring the multiple platforms like WhatsApp & Instagram
- The VR program
- Video Calling device Portal
- Its introduction in the Hardware Market
- Government Regulations
These problems and trust issues have plagued the profit streak of the company leading to this sudden decline in its stock value.
Facebook officials and executives have given their testimony and numerous interviews about its Privacy Settings & Data Leak Prevention models in the business. They are implementing different techniques and models to prevent fake news and media.
The longer the privacy backlash continues, in addition to the ongoing issues about 2018 election & data leak issues, it may cause a greater damage to Facebook’s core business.
“The question is will this monetize at the same rate as News Feed,” Sheryl Sandberg, Facebook’s COO, said on a conference call with analysts in July. “And we honestly don’t know.”
On a positive note
But all said and done, I feel Facebook is a “Technology Power House”. It’s investing heavily on AI and other platforms that helps in its core business i.e. news and personal feeds.
I sense if it can win the users and investors trust back, and use WhatsApp & Instagram to be the mediums, it can soon become one of the most profitable social media mediums.