By
Godfrey Benjamin
April 18th, 2024
Facebook (FB) stock lost over 2% of its value on Friday and now its price is also decreasing in the pre-market. However, in the long term, it still looks viable.
Facebook Inc. (NASDAQ: FB) stock lost 2% on Friday. Some experts believe that the dip in stock price came as a result of Fakebook’s recent earnings report. However, it’s worth mentioning that there has enough time gone since the moment of publication. But at that analysts are still wondering if the stock will be able to make meaningful gains. This has led many to consider divesting from their holdings in the social media giant as they have doubts about the performance of the Facebook (FB) stock in the long term.
Others, however, have taken into consideration several factors.
Companies such as Amazon.com Inc (NASDAQ: AMZN) spiked in stock value at the beginning of the year. This has happened despite similar results by both companies. Investors have been bullish about AMZN stock, though now it is also falling. Facebook (FB) stock prices indicate more serious bearish tendencies.
Facebook (FB) Stock Shows Strong Signs for Profit in Long Term
In terms of average revenue per user (ARPU), impressions reportedly improved year-on-year (YOY) by 31% while revenues increased by 25%. The ARPU of Facebook’s website also increased to $8.52. This is up from $7.37 a year ago. Revenue increased by 25% as opposed to the last quarter as well.
The 2% dip is a knee-jerk reaction by investors as Facebook has done little to address the privacy concerns following the Cambridge Analytica and other scandals.
Also, Facebook seems to have revealed nothing about its plans for Whatsapp and other platforms that aren’t yet monetized. This has raised concerns from investors about the plans of Mark Zuckerberg. The Wizard of Menlo Park hasn’t indicated any plans from his goodie bag just yet.
This has already created a general mood of suspense among investors. Maintenance of advertising policies during the last election cycle is a major factor as well. Facebook had been accused of not investigating accusations concerning Russian interference in 2016.
The company has already done its best to adjust to the various concerns. Security updates and adjustments have been expensive. Security and privacy improvements are said to have improved by 34% in the last year alone.
Alphabet’s Revenge Also Contributed as Well
Alphabet Inc. (NASDAQ: GOOGL) also contributed to the general uncertainty that has surrounded Facebook. Recent changes to the Chrome browser bars websites from tracking browsing history. This also dealt a blow to Facebook’s analytics engine for advertising.
Going forward, privacy concerns are expected to feature heavily this year. 2020 is an American election year. This will influence decisions from top regulators. Based on recent experiences in 2016, regulators will take a second look at Facebook’s privacy policies.
Legal expenses are rising too. Sources report that administrative expenses are up by 87% Year-On-Year. A majority of these increases stem from legal costs. Settlements are not excluded from this. Stock prices have recovered to be close to 2018 highs. it seems that the stock prices may have to test new dips. A new direction in the long term is also in the offing. The 2018 high presents a major resistance that the stock prices would have to pull through.
Whatever happens, the Wizard of Menlo Park and his team would have to pull a surprise to scale through. New platforms are competing for Facebook’s dominance as an organization. The younger generation is looking for new experiences. Mark Zuckerberg seems poised to deliver just that. Facebook Inc holds long term value. At the time of filing this report, in the pre-market, Facebook (FB) stock stood at $204.02 which is a 2.93% drop since the last trading session.