What’s New: Facebook stock has dropped as much as 21% since yesterday morning (according to after-hours trading numbers). And their quarterly report is disappointing stakeholders at best.
While Facebook couldn’t point to a single event that caused the drop, we can think of a few possible reasons for the decline:
- Backlash from Cambridge Analytica and user frustration over privacy concerns
- Europe’s GDPR privacy laws (which make it more difficult for Facebook to access user data)
- Recent bugs and crashes in the mobile app
- Limited space for ads
- Slow growth of Facebook Stories/Not enough advertiser demand for the Stories feature
What We Think: Facebook stock is not invincible. But even with these drops, at it’s most “disappointing”, Facebook still added 22 million active users last month alone, and boasts 2.5 billion unique users for at least one of its family of apps (which includes Facebook, Instagram, WhatsApp, and Messenger).
Even if Facebook does see the predicted “high single digit” drops in revenue, it would still be poised for an estimated growth of over 30% next quarter.
What This Means for You: Social should certainly remain a part of your digital marketing strategy, but it should not be the linchpin. Even if it has a vast user base, and is a great place to share content and build engaged follower groups, no social media platform is a sure thing. Algorithms change, stock prices waver, and trends peter out. Make sure your marketing strategy is strong enough to withstand these ebbs and flows.
