Should We See Facebook’s Recent Issues as an Alarm for Social, Video or Both?

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By Michael Inouye | 3Q 2018 | IN-5224


Facebook Recorded the Largest Single-Day Loss for Any U.S. Public Company on July 26th


By the time the dust settled following Facebook’s quarterly announcement, the company’s stock price drop had erased roughly US$120 billion in market value—the largest single-day loss for any U.S. public company. Looking at various postmortems posted online about this historically bad day for Facebook, one might get the impression that user growth (or rather the lack thereof) is the main culprit, along with guidance that suggested similar results for the rest of the fiscal/calendar year. There is, however, more at work once you peel away some of the superficial layers—in particular, the bruising that Facebook has experienced from its more recent public relations issues.

A plateauing user base in the North American market raises a flag since the region accounted for nearly 49% of the company’s ad revenue in 2017 (ad revenue represents more than 98% of the company’s total revenue). Further, Europe (24% of Facebook’s ad revenue) saw a decline in both daily and monthly activ…

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