F Stock Down 2% on Tuesday, Facebook Ad System Faces Plausible Decline

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by Steve Muchoki · 3 min read
F Stock Down 2% on Tuesday, Facebook Ad System Faces Plausible Decline
Inside the Facebook Denver office. Photo: Facebook

In September, Facebook informed its partners about the possible effects of Apple’s iOS 14 on its advertisement policy.

Facebook Inc (NASDAQ: FB) stock dropped approximately 2.26% during Tuesday’s trading session to close the day trading at $258.66. In Wednesday’s pre-market, FB shares started to move higher. At the time of writing, the F stock price was up 0.25%.

Facebook stock is largely supported by the many subsidiary companies the parent company has acquired over time. This is because it has expanded far beyond its original social networking platform since its founding over a decade ago. Over the 16 year period that it has been in existence, Facebook has acquired Instagram, Whatsapp, Oculus VR, Onavo, Beluga, and many more.

Hereby, the company is able to reach out to a larger customer base than any other social media company globally. Due to the high number of active daily users, the company has attracted a huge number of advertisers who use its platform hence collecting significant revenue from the ad system.

According to metrics provided by MarketWatch, Facebook stock has gained approximately 26.02% year to date. In the past three months, Facebook stocks have jumped around 7.39%. However, they have dropped approximately 4.61% in the past one month and were down 1.20% in the past five days through Tuesday.

The recent decline can be largely attributed to the upcoming presidential elections that have a history of negatively impacting Facebook stock directly.

At the time of writing, the company had a market capitalization of around $753.94 billion with approximately 2.4 billion outstanding shares. Notably, Facebook shares 52-week volatility has been high in relation to other stock markets as it has ranged between $137.10 and $304.67.

With the ongoing coronavirus pandemic that has damaged a lot of business, the company has reported a continued drop in its advertisers.

Facebook and Its Ad System Future

In the middle of September, Facebook updated its partners on the possible effects of Apple’s iOS 14, in regards to the advertisement policy and its ad system in general.

“We, along with the rest of the business community, continue to await final policy details from Apple. Given Apple’s delayed implementation of the user permission requirement, we will continue collecting IDFA on iOS 14 in an attempt to reduce unnecessary disruption to our customers’ businesses,” Facebook indicated in a blog post.

Fast forward, Facebook Chief Revenue Officer David Fischer said on Tuesday that the economic models that rely on personalized advertising are “under assault” as Apple readies a change that would limit the ability of Facebook and other companies to target ads and estimate how well they work.

Although the company has the capacity to defend and access any change offered by the new ios 14, the company seeks to defend the existing model to safeguard other small capped businesses.

“There are different business models out there. Apple has one that sells luxury hardware or subscription services, mainly to consumers like us who are fortunate enough to have a lot of discretionary income in some of the world’s wealthiest countries. That’s fine, but I don’t think it’s appropriate to then dictate that has to be other business models,” he indicated.

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Steve Muchoki
Author Steve Muchoki

Let’s talk crypto, Metaverse, NFTs, CeDeFi, and Stocks, and focus on multi-chain as the future of blockchain technology. Let us all WIN!

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