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Amidst Negative Reports About Facebook, Its Stock Shares Keeps Rising

Uloma Mary Omolaiye by Uloma Mary Omolaiye
April 27, 2018
in Business, Enterprise
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Facebook Inc. on Wednesday reported an increase in the number of users and a rise in profit by 63%. The social network recorded a 13% increase in the number of active monthly users which rose to 2.2 billion. It’s been two years since the social network marked such massive achievement.

Despite its scandal with Cambridge Analytica and its hearing with the US lawmakers and its sanctions from other countries, it did not affect the business. In fact, the scandal has been a blessing disguise; it apparently boosted Facebook’s popularity.

Read more: Facebook’s Quarterly Earnings Are A Bright Spot Amidst A Sea Of Bad Headlines

After the devastating disclosure in March that the British consultancy, Cambridge Analytica had harvested the information of about 85 million users to influence the US election, the social network subsequently lost about $50b as the scandal progressed. During this time, the investors called for his resignation, but he couldn’t be unseated because even though he had only 16% shares of the company he started, he maintained a 60% right of decision making. That was a smart move by Mark Zuckerberg.

Although the scandal prompted several apologies from Mark Zuckerberg and subsequently led to sanctions and public hearings, advertisers were unshaken by the move. During this time, #deleteFacebook trended on Twitter and some significant figures like Elon Musk, Brian Acton, and Will Ferrell among other influential figures proceeded to delete their accounts. This still does not affect the social network’s revenue.

Read more: Facebook Stock Shares Soar After Meeting With U.S Senators

Facebook, along with other Internet-based companies like Alphabet’s Google rely solely on target adverts for the large chunk of revenue, and this is why it’s unwilling to opt out from target-marketing. Its shares traded at 7.1%, beating Wall Street expectations. Facebook’s quarterly closed at 49% as against 39% the following year.

Daniel Morgan, senior portfolio manager at Synovus Trust Company and one of the shareholders at Facebook Inc. speaks on the hope that his company which holds about 73000 shares in the social network has. He said: “everybody keeps talking about how bad things are for Facebook, but this earnings report to me is very positive and reiterates that Facebook is fine, and they’ll get through this.”

The investors had in March called for his resignation after weeks of negative headlines about the company’s inappropriate handling of users’ private information and its role in the last US election. The platform had also received blame for allowing fake news to thrive and for fuelling violence in certain countries via the hate speeches.

Amidst all these, the users remain resilient. The chief financial officer says that the platform is doing everything possible to ensure that the scandal does not leave a permanent negative review and will spend so much to counter insecurity. He says that expenses will rise to 50-60% to fight fake accounts and pull down hate speeches, including violent videos that promote unrest in certain countries.

It’s uncertain how the new EU regulations are likely to affect Facebook’s revenue. Strict regulations could make target marketing difficult for the social network making it less lucrative. 

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Uloma Mary Omolaiye

Uloma Mary Omolaiye

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