“The Facebook Papers” is a collection of internal Facebook documents that were compiled from disclosures to the Securities and Exchange Commission and made available to Congress by Frances Haugen, Frances Haugen’s legal representative. A consortium of news 17 organisations, including SME, obtained the redacted versions.
This is just the latest in a seemingly endless series of Facebook missteps and bad headlines. Facebook is causing a lot of fury among investors, lawmakers, advertisers, and users, which could signal that it’s time to change its leadership.
The Wall Street Journal published previously a series of stories that were based upon tens of thousand pages of internal Facebook documents that Haugen leaked. (The consortium’s work is based upon many of the same documents.
Wall Street is clearly expressing dissatisfaction with Facebook’s direction. The stock has fallen below its all-time highs. The stock dropped 5% on Friday and is now 15% below its peak price earlier in the year.
Facebook’s 83% gain over the past two-years has been a little behind the Nasdaq. It is also trailing Alphabet’s performance by a wide margin.
Facebook shares have risen nearly 75% in October 2019, compared with a jump of more than 140%. (*(AppleAAPLGoogle owner – Nearly 120% (*(AlphabetGOOGL. Facebook shares actually trailed all FAANGs (which also include (*(AmazonAMZNAnd (*(Netflix(*)(NFLX) as well as MicrosoftMSFT(*()And (*(TeslaTSLADuring the past 24 months.Facebook might have to do something about the poor performance of its stock among the tech giants of the Nasdaq. Facebook, which also owns Instagram Messenger, Messenger and Ocuius and reports earnings after the closing bell Monday. It is widely anticipated that it will announce a corporate redesign that will focus attention on the company’s growing influence in what is known as the metaverse.To silence Facebook critics, it might take big changesWill this be enough for investors to forget about the revelations made by “The Facebook Papers” Even though profits are expected to increase 18% compared to a year ago, it doesn’t seem probable. Zuckerberg may need to give up more control over the company to an outsider. Skeptics may not approve of Sheryl Sandberg being named chief operating officer. Critics might not consider a promotion for Sandberg a significant enough change, given her long tenure at Facebook.Zuckerberg is the owner of 58% of the voting rights and shares of the company. Any change would have to be initiated by Zuckerberg. It is possible that investors will not be able or willing to press for change.“It would be helpful if Zuckerberg gave away control, but I’m uncertain how likely that is,” Bryan Koslow, principal at Clarus Group, an investment company that owns Facebook via exchange-traded funds, said.Koslow stated that spinning off Instagram and other measures to disintegrate Facebook could be a starting point.
“There is a bull’s eye on Facebook’s back. He added that they have products and services that are addictive.However, one shareholder of Facebook stated that Facebook may not change until users and advertisers leave Facebook in droves.
“Management’s response on the news flow remains disappointing,” stated Daniel Morgan, senior portfolio manager at Snyovus Trust in an email. “However, the negative press has had a limited impact on advertiser spending in the past due to the platform’s wide reach.”
And Wall Street analysts are following the advertiser money — not the never-ending sea of unflattering headlines about the company.
The consensus price target for Facebook stock is $417 per share, which is nearly 30% more than the current levels. Refinitiv reports that 48 analysts rate Facebook stock as a buy, while seven others rate it a hold and two recommend that investors sell it.
Facebook has been through a lot of negative publicity before. This time, however, it might be different.
But unless Facebook customers and users show they truly have had enough — in a manner that impacts ad revenue, earnings and the stock price in a much more meaningful way — then there may be little incentive for Facebook to change its stripes.
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