Home Business “The Facebook Papers” Dampen The Enthusiasm Among Investors

“The Facebook Papers” Dampen The Enthusiasm Among Investors

by Mary McFarren

“The Facebook Papers” is another setback for the social media company that could potentially cause the break up of the multi-billion dollar enterprise. Politicians and investors are sending a clear message to Facebook that it might be time to pull some radical changes within the company’s top leaders.

Wall Street investors are pulling back from Facebook’s shares causing them to drop more than 15% compared to the highest price it reached earlier this year. Only on October 5th, after Frances Haugan testified in front of the congress, did the stocks fall 5%. This is yet another major mess the company faced recently.

Facebook stocks are falling behind

The latest developments will surely discourage investors to support and promote stocks. Facebook has been under attack for the past two years due to the rumors about the company not treasuring users’ privacy rights. As a consequence, the shares have been dropping behind other FAANG stocks. Since October of 2019, Facebook shares increased by 75% which is considered a relatively low number. In comparison, Apple saw a surge of 140% and Alphabet, owned by Google, 120%. Other members of the top five tech companies also saw a spike in stock prices. Two years ago, Amazon’s stocks were going for around $1600 compared to today’s price of more than $3300. Netflix and Microsoft also gained more than 150% in value for the last couple of years. Facebook’s share prices are at around $420.

Source: Google Market

Facebook announced the launching of their next new project – metaverse. Mark Zuckerberg describes it as a new chapter in the “virtual environment”, bringing the Internet to life or at least making it in 3D. Maybe that’s what the social media company needs at the moment. A major shakeup will be a do-or-die scheme that will set the course for the future of Facebook that also owns WhatsApp, Instagram, and Oculus.

Will the big change help to restore investors’ trust in Facebook?

Facebook’s most important task in the near future is to sway the attention of investors from the release of incriminating documents. Zuckerberg is fully aware that he will need to step down, or at the very least give up some of that 58% voting rights implementing significant and important changes at the top. Cosmetic modifications, like naming chief operating officer Sheryl Sandberg as CEO, are just not going to be enough for politicians, investors, and advertisers to regain trust in the company’s business management.

Source: Business Insider

“It would help if Zuckerberg gave up control but I’m not sure how likely that is,” said Bryan Koslow, principal of Clarus Group, adding that the break up of Facebook might be a great start.

On the other side, users are still a huge crutch that Facebook can always rely on. Advertisers won’t be leaving the platform as long as there is an audience for their products and services. This might be the reason Mark Zuckerberg seems so slow to make any crucial changes in the company business model. People are still visiting social media platforms regardless of the evident misuse of users’ private information.

What is “The Facebook Papers”?

When Frances Haugen disclosed thousands of pages of internal Facebook data to The Wall Street Journal and the SEC in September of 2024, the New York stock exchange halted for a minute. Everyone thought that a major housecleaning is to follow among Facebook lines, but so far, the social media giant has been dragging its legs.

In the meantime, 17 major news organizations have come together to investigate the affair. Newsrooms around the globe had only one task in front of them – getting their hands on thousands of pages of Facebook’s internal information. Journalists worked for over a month when finally SEC released a redacted version of the papers. Still, it was more than enough to see that Facebook was intentionally promoting hate among users giving false information for the sake of the views and, of course, profits.

Source: Business Insider

“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”, Haugen, a former Facebook civic integrity department manager, said.

Regardless of the clear implication by the whistleblower, people are still flocking to Facebook and Instagram. For the time being, the major social media platforms will not see any decline in profits or lack of users who are anxiously awaiting Metaverse’s debut.