The last few weeks haven’t been great for Facebook investors. What happened and how did it impact stock prices? We’re checking it out and going over the key fundamental events to look out for this week.
A cryptic catastrophe that affected billions
Facebook recently disappointed billions of users with the major service outage on the 6th of October.
Service outages aren’t an uncommon occurrence these days, but there are wobbles and there are catastrophes. When the lights at one of the biggest companies in the world go out for 6 hours straight, it’s definitely the latter of those two.
Facebook’s apps which include Facebook, Instagram, WhatsApp, Messenger and Oculus, began displaying error messages around 11:40 a.m. Eastern time.
Why was this such a massive deal? Well, more than 3.5 billion people use Facebook, Instagram, Messenger and WhatsApp to communicate with loved ones, not to mention the millions of businesses that pour billions into advertising and outreach on the platforms.
Facebook cryptically said that the downtime was due to “changes to its underlying internet infrastructure that coordinates the traffic between its data centers.” Okay then, FB. Whatever you say.
What happened to FB stock?
FB stock closed the day down nearly 5%, which equates to around a $47 billion sized slice from the company’s market value cake. Oof!
No one felt that more than Zuck, of course, whose personal net worth dropped by about $4 billion in a single day. Still, being the 5th richest person on the planet will be some consolation.
Despite this major hiccup, Facebook’s YTD performance is up a very healthy +20.76%. It’s the longer-term that looks even more shaky. FB stock has actually been dipping slightly since the start of September.
The biggest impact of the outage is likely yet to be revealed. Fortune has estimated that Facebook lost nearly $100 million in the 6 hours, mainly due to lost ads revenue. 10 million businesses, whose ads were stopped for a sustained period, are potentially sharpening their axes, getting ready to request some form of compensation for their own loss of revenue.
A great deal will be riding on the next quarterly earnings report.
Social media rivals make hay
While Facebook took a kicking, other social networks were circling above. Twitter cleverly reached out to, well everyone, on hearing the news.
The platform unsurprisingly saw its week-over-week usage grow. According to app-based data analytics company, Sensor Tower, Twitter’s usage climbed 11%.
Telegram’s messaging app gained over 70 million new users on Monday, according to founder Pavel Durov. Telegram rival Signal also saw its usage grow 15% week-over-week; while Snapchat’s usage grew 23% week-over-week.
TikTok failed to capitalise, however, seeing only a modest 2% growth in usage week-over-week.
Even bigger problems on the horizon?
If an angry user base, big stock dips, and the prospect of hefty business refunds wasn’t enough, Facebook has another major issue playing out right now.
Facebook’s former product manager Frances Haugen testified in front of the Senate last week, blowing the whistle on what she claims are some pretty shady things going on inside the notoriously insular company.
She stated, “The thing I saw at Facebook over and over again was there were conflicts of interest between what was good for the public and what was good for Facebook. And Facebook, over and over again, chose to optimize for its own interests, like making more money.”
Traditionally, the public don’t like hearing things like this and it’ll be interesting to see what else comes out.
FB stockholders are bound to be more than a little worried about the most recent events, with very good reason. We’d say “watch this space”, but let’s be honest, none of us will be able to take our eyes off it.
What do you think?
What do you make of all of the recent Facebook hullabaloo? How do you think this is all going to play out? Tweet us your thoughts at @_Contentworks.
What’s on the trading agenda this week?
Not such a busy week ahead for the markets, but here’s everything you need to know about.
● NZD — Inflation Rate YoY (Q3)
● CNY — GDP Growth Rate YoY (Q3)
No major events scheduled.
● GBP — Core Inflation Rate YoY (SEP); Inflation Rate YoY (SEP)
● EUR — Core Inflation Rate YoY Final (SEP)
● CAD — Core Inflation Rate YoY (SEP); Inflation Rate YoY (SEP)
No major events scheduled.
● JPY — Inflation Rate YoY (SEP)
● USD — Markit Manufacturing PMI Flash (OCT)
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The Contentworks team