- Facebook’s share price plunged after an ugly quarterly report.
- A rise in the company’s operating costs spooked investors.
- But Facebook has bigger problems over the long term.
There’s a simple reason why Facebook stock is in free-fall today. The Mark Zuckerberg-led social media giant has peaked.
FB shares slid more than 6% on Thursday after Facebook reported mixed Q4 earnings. Earnings per share ($ 2. 94) and revenue ($ billion) outperformed.
But there was another figure that loomed much larger: a massive 94% increase in operating costs and expenses, which rose to $ (billion for the year.)
On top of stagnant user growth, this rise in expenses signals an alarming trend for the social media giant.
Attempts to expand the company into new sectors and ventures appear to have stalled. Combined with a decline in user engagement , this hints that the company is struggling to grow.
It’s Getting Harder Being Facebook
It’s tough being Facebook.
Not only does much of the world blame you for damaging your users’ mental health and undermining democracy , but governments and regulators throughout the globe are increasing getting on your case.
Because of billion-dollar fines , multiple anti-trust investigations , and the cumulative effort of having to constantly prove that it’s not the embodiment of evil , the cost of running the Facebook behemoth is growing.
Unsurprisingly, Facebook’s operating margin is declining as a result. In , it was %. In , % .
Facebook’s
Yet rising costs aren’t the only reason why Facebook stock is imploding and investors may be on the verge of leaving en masse.
Facebook Stock Is Plunging Because the Company Can’t Grow
Facebook is struggling to expand.
FB’s quarterly results showed that its global monthly active users (MAUs) number had stagnated at 2.5 billion. U.S. and Canadian MAUs did rise – but only by 1 million to 728 million.
If the market wasn’t already spooked by such feeble numbers, they’re almost certainly spooked by the fact that Facebook’s growth plans appear to be dead on arrival.
Its much-vaunted Libra cryptocurrency faces stark opposition from governments around the world
So much for its plans to sweep up all our financial data.
Then there’s WhatsApp, which Facebook acquired in 2020 for a cool $ billion
FB Investors Don’t Want to Go Back to Basics
This really shouldn’t be surprising. Look at other new routes to growth Facebook has dallied with in the past. They’ve almost all failed spectacularly.
Do you remember its hilariously ill-fated Free Basics service? Facebook launched it in 2016 with the grand aim of providing “free” internet access to millions of people in India. It was ignominiously shut down by India’s telecoms regulator. in early, ostensibly for undermining net neutrality.
Facebook is suffering from a pathological inability to launch new successful ventures. It doesn’t look capable of expanding beyond its basic business, and it’s this suspicion that is scaring off investors.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.
This article was edited by (Josiah Wilmoth) .
This really shouldn’t be surprising. Look at other new routes to growth Facebook has dallied with in the past. They’ve almost all failed spectacularly.
Do you remember its hilariously ill-fated Free Basics service? Facebook launched it in 2016 with the grand aim of providing “free” internet access to millions of people in India. It was ignominiously shut down by India’s telecoms regulator. in early
Facebook is suffering from a pathological inability to launch new successful ventures. It doesn’t look capable of expanding beyond its basic business, and it’s this suspicion that is scaring off investors.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.
This article was edited by (Josiah Wilmoth) .
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