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Why is the collapse of Facebook shares?


Among the best known companies worldwide we always find Facebook at the top. Either because of the popularity it has or because of the controversies it has recently faced, the relevance of this company is undeniable. However, recently its actions collapsed and here we explain more about it.

Facebook has evolved to become more than just a social network. Since its birth in 2004, the American company has grown to become what we know today. Much of this has to do with its use for advertising.

However, the latter has brought Mark Zuckerberg, CEO of Facebook, and the entire company all kinds of disputes. Recently, the debate about what should the company’s responsibility be when tackling hate speech that may spread on the social network.

Obviously, this is a delicate subject. You are dealing with a fine line that separates freedom of expression and condemnation from speeches that can harm others considerably.

How has all this dispute influenced the collapse of Facebook shares?

Since June 25, Facebook shares have been in a kind of free fall, with a 8.32% drop last Friday.

Chart of Facebook's stock price in the last 5 days, which clearly shows its 8.32% drop. Source: Yahoo Finance
Chart of Facebook’s stock price over the past 5 days, clearly showing its slump at the close of Friday. Source: Yahoo Finance

The reason for this is the number of companies that have decided to withdraw their Facebook ads. These companies were inspired by the campaign #StopHateForProfit initiated by civil rights groups, including the NAACP and the Anti-Defamation League, on June 17.

Among them we have Verizon, Unilever, Starbucks, Honda, etc. Naturally, the effect of this was reflected in the value of their shares.

To understand the extent of the damage, we must know that Facebook generated $ 69.7 billion from advertising last year. With this, it was only behind Google as the second largest digital seller.

Thus, according to Luis Di Como, executive vice president of global media for Unilever, “Continuing to advertise on these platforms at this time would not add value to people and society. We will be monitoring along the way and will reconsider our current position if necessary.

More or less is the position that companies have followed that have joined what has been informally called the “Boycott Facebook”.

What will the company do about it?

In order to regain the confidence of shareholders and investors, and the same companies that have withdrawn their advertising, some Facebook executives have declared changes in their policy against hate speech.

While Zuckerberg commented in interviews in May that he did not believe Facebook had the role of a true arbiter of everything people said online, now things have changed a bit.

What happens is that soon Facebook will hide or block content considered “hateful” or that could “harm the vote” in the next US election. Without exception for any politician.

However, the effectiveness of its measures and Facebook’s commitment to carrying them out will have to be evaluated. Otherwise, their shares will continue to decline as more and more companies decide to join the protest.

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