It seems like the big social media player is having a more difficult year than expected. Just when everyone thought Facebook has recovered from the major Cambridge Analytica scandal a few months ago, more bad news has hit Mark Zuckerberg.
During the Cambridge Analytica scandal, in which Facebook sold user’s information to a third party for political uses, the mega company lost millions of dollars, not to mention the negative image that it had to deal with for weeks.
However, Facebook recovered faster than expected. But, when things just started to look up for the tech giant, their stock value fell drastically, causing them to lose millions of dollars.
Last Thursday (26/07/2018), Facebook faced the biggest single day collapse in the stock market history, losing over $120 billion (£92bn) from Wednesday to Thursday.
The multi billion company went from having a stock value of over $620 billion to around $510 billion. Yes, they are still what could be considered n stable company with a solid stock value, but the truth is, Facebook is going through one of the hardest times since the company was first founded.
Why is Facebook’s reputation the line?
Companies don’t lose that much money overnight for no reason, and in this case, it’s quite simple: People just aren’t using Facebook as much as they used to.
What motivated the stock value decline of the company was the huge concerns by investors about Facebook’s future, after noticing the company’s numbers aren’t growing as they were last year.
Numbers don’t lie, and Facebook isn’t doing good. Reports have shown the multibillion company is not doing so well in the United States, with its online presence and active number of users declining faster than ever. Take into consideration, Social media usage in general continues to grow rapidly in 2018.
The number of active users on Facbook is still massive by any standard, however, when you look at the numbers of daily active users and compare them to previous months and even years, the results are not promising.
Investors are extremely concerned about the fact that Facebook’s growth might be coming to an end… And they might be right.
David Wehner, Facebook CFO declared that the company’s growth will significantly decline during the next months of the year, to a point that it could drop about 7% more compared to the previous quarters of the current year.
Of course, this massive drop didn’t only affect Facebook, but other companies such as Twitter and Snapchat (although they are doing way better than Facebook, we must say).
As to what this incredible company can do to avoid this situation and regain the trust of its investors, the answer might be a bit more complicated. Raising the market value can be difficult, especially when you understand the reasons behind the collapse.
Not only are they losing active users by the minute, Facebook is also dealing with trying to make more money while improving their platform and trying to monetize some features.
What’s the next step? We don’t know. Although times might look dark for Facebook, we are certain the huge social media company will find a way to stay relevant and raise their stock value once more.