Written by Devuni Goonewardene
29 Jul, 2018 | 1:19 am
News1st (Colombo) : When it comes to market capitalization, Facebook was worth $629.6 billion on Wednesday (25 July) The company’s worth on Thursday (26 July) was $506.2bn. In other words, Facebook stock lost $123.4 billion in value overnight.
This performance isn’t due to yet another data misuse or election interfering scandal. The company has reported disappointing earnings. For the first time, Facebook’s growth is stalling.
According to tech crunch, there are barely more people checking Facebook every day compared to the previous quarter. To top it off, Facebook’s user base has shrunken in Europe. Even though Facebook is still growing, it’s clear that Data Protection regulations combined with a saturated market isn’t doing the company any favors.
Facebook has a dangerous business model and with the new data protection regulation, their revenue is taking a hit. Thousands of employees are looking for ways to collect more data. Business teams can then sell expensive ads because they’re perfectly targeted. The best way to optimize those efficient ads is by making addictive products. If you spend more time looking at stories, you’re going to be exposed to more ads.
That’s why Facebook optimizes for engagement. When you get outraged, you become sad or happy, you like and you share, Facebook makes money.
However, this year is a turning point for Facebook. People will look back at this moment as an inflection point in the company’s trajectory. But it’s still unclear if Facebook has the answer to its structural issues.
For founder Mark Zuckerberg, the loss came to almost $16 billion, according to Forbes, which tracks billionaire wealth in real time. That dropped him from fourth to sixth on the list of richest people in the world.
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