The UPS and downs of Facebook

ECONOMY

The founder of Facebook mark Zuckerberg has lost $16.8 billion due to the dissatisfaction of investors the financial results of the company, estimated by Bloomberg.

1
25 Jul 2018

At the close of trading in new York on Wednesday, the company’s stock price fell more than 20%. At the opening on Thursday 26 July, the value of securities continued to fall, down another by 18.35%. The capitalization of the company decreased by $120 billion Reasons:

  • Analysts were disappointed in published financial statements Facebook for the second quarter of 2018. The company said net profit by 42% to $of 13.23 billion, although its predicted level of $13,36 billion;
  • The low rate of growth in the number of users of 1.54 per cent against 3,14% in the previous quarter;
  • Facebook CFO David Weiner gave a forecast for a slowdown in the growth of the company;
  • Strengthening data protection in Europe;
  • Implementation of unpopular types of content delivery.

Implications: If this trend for a drop in share prices will continue into Thursday, Zuckerberg runs the risk of losing third place in the ranking of the richest people in the world, which he took just in the beginning of July.

2
19 Mar 2018

Previous to a dramatic fall in Facebook shares was a reduction of almost 7% in the spring of this year. After that, the company’s capitalization for the week fell by $50 billion Reasons:

  • The disclosure that British Cambridge Analytica has collected personal information of more than 50 million users of the social network without their knowledge. According to the New York Times, the company used the information obtained about users to create a psychological portrait of the electorate before the elections of the President of the United States and create advertising.

Consequences: the Scandal with the leak of information has cost Zuckerberg $4.9 billion In April for two days of nearly 10 hours he had to testify, answering questions almost 100 congressmen and senators about Cambridge Analytica, interfering in elections and “espionage” for users of other owned platforms such as WhatsApp and Instagram. The founder of the social network promised to correct their own mistakes. The company needed about two months to recover — in may the company’s value has returned to pre-crisis level.

3
November 3, 2016

Thursday 3 November 2016 the share price of Facebook fell by almost 5.7% immediately after reporting for the third quarter. Reasons:

  • The investors ‘ fears due to warnings to the company about a possible reduction the reduction of advertising revenues in 2017 due to the low rate of increase in its volume. Although the company’s revenues showed a positive trend, amounting to just over $7 billion.

Impacts: mark Zuckerberg said that the company is proud of the past quarter and continues to work on the development of technology.

4
30 Jan 2014

In early 2014, Facebook paper increased in price by 14.2% to $61,1 per share. Then it became their highest price during the trading of shares on the stock exchange. Reasons:

  • Investors have played the positive results of 2013. According to reports, the company annual revenue was $7.87 billion, compared to $5,08 billion in the same period of 2012;
  • The high growth of the audience — the monthly audience reached 1.23 billion people, which is 16% above the previous indicators. The number of active users of the network with mobile devices is 556 million

5
25 Jul 2013

But exactly five years ago, shares of Facebook on the contrary has increased dramatically at auction, soaring by almost a third to $34 per share. By the end of the month, the paper company has exceeded the offering price in the IPO. Reasons:

  • Investors played in the financial statements of the company for the second quarter of 2013. During this period, Facebook earned $333 million, while a year earlier during the same period, up $157 million;
  • The company announced major advances in mobile Internet and the development of apps for phones and tablets.

6
The IPO in 2012

The most famous financial failure was the Facebook IPO. IPO at $38,23 allowed the company to raise $16 billion, making it the largest at the time of IPO in the history of trading in the United States. But literally on the second day of the paper of the social network began to fall. After just three days they fell by 18%. And in August, shares of Facebook fell below half of IPO. Analysts cited several reasons for the failure:

  • A large number of shares offered for sale;
  • The General instability of the stock market due to problems in the global economy;
  • The recent decision by the world’s largest car manufacturer General Motors to refuse advertising in Facebook.

The experts also drew attention to:

  • Too late;
  • Bad timing;
  • Reassessment of investors;
  • Problems in the first day when, due to a technical failure in the system of the NASDAQ stock market, selected as the site for an IPO, investors have been unable to understand their true application.

Consequences:Broad critics have subjected the organizers of the IPO — investment Bank Morgan Staley and his partners, who were charged that they received exclusive information about Finance Facebook. In addition, the result was lawsuits of the shareholders, believing that the company negligently approached the organization IPO.

7
The experts

FINAM analyst Leonid Delitsyn said that the behavior of stocks is actually not related to the popularity of the product or volume of its audience. “The behavior of a stock is primarily determined by how they are expensive at the moment. And what is expected from them in the future” — said the expert. He explained that if you use the multiplier of the ratio of cost to revenue, in the case of Facebook before the fall the company was worth 17 times more than its annual revenue, and is now worth 14 times more. The expert also noticed that almost all of the promotions that Facebook lost, she earned, starting with may.

Senior analyst IR “freedom Finance” Vadim Merkulov considers the situation logically: “Facebook has reached its ceiling and cannot increase the user base as actively as before. Sooner or later it had to happen, but occurred against the background of neuticles scandal leak user data”. According to experts, the negative reaction to the news, the social network will be short-lived, and its securities will purchase in the next month and a half. Especially because, according to him, Facebook will actively develop new projects.

“Social networks today – it is “not hype”, they became a lot, they have varying degrees effective, but in any case, the peak audience time of growth and presence in them is long passed. “Grow from scratch” was just “to keep the theme of growth” – is more complicated, and now (as in any adult project) have to fight for the retention of the already absolute classroom units”, — said the head of the Russian Association for electronic communications (RAEC) Sergei plugotarenko.

Managing Director of investment group “Nord-Capital” Mikhail Khans explain what such a violent reaction to warning Facebook about the slowdown: “I Want to pay special attention that if you look at the second quarter report, the numbers are more than worthy – the company’s net profit year-on-year increased from $3.89 a to $5.12 billion, But analysts expected more, but rates fell immediately after the call with analysts, CFO David Weiner acknowledged that growth will continue to slow down. Just “slow down”. The reaction of investors – minus 20%. This shows the size of the inflated bubble in the global equity markets, especially the us and China”.

8
The value for users

“Shares of Facebook impact on users of not more than shares of our mobile operators on the cost of communications. We (as users — ed.) do not know what happens to them and are not interested in. We are isolated from all problems that will test Zuckerberg,” — explained Leonid Delitsyn. According to experts, more troubles will take to debug an artificial intelligence, who will moderate the social network for violations on the part of users.

“For many users was the effect of novelty of social networking, when they got a tool with which you can communicate with anyone in the world. And now many have begun to feel the negative aspects of openness and information dissemination,” — said the chief of the new media of TV channel “Russia” Anton Korobkov-Zemlyansky. The expert noted that the era of Web 2.0, and format maximum publicity ends. “The question is how much is left? Because now there is an increasing demand for secrecy of information,” he explained.

Sergei plugotarenko also said that “the age of social media, obviously, is — they are replaced by integrated communication services. Including instant messengers or something that will soon be built on their basis. WhatsApp (Facebook owns — ed.) at the same time – does apparently not integrated with the point of view of user, no Facebook or Facebook messenger, although such integration could add new quality”.

And Vadim Merkulov believes that to completely abandon social networks users can not, just for future other formats — for example, by the same messengers.

 

Arina Ruxin

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