Facebook Stock Drops Roughly 20%, Loses $120 Billion in Value After Revealing Growth Earnings

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Facebook Stock Drops Roughly 20%, Loses $120 Billion in Value After Revealing Growth Earnings

According to Market Watch, https://www.marketwatch.com/story/facebook-stock-crushed-after-revenue-user-growth-miss-2018-07-25 Facebook’s stock dropped nearly 20%. That’s huge.

The reason for this is that the earnings growth that was announced was less than what investors had planned on.

What does this Facebook stock drop mean for us advertisers on Facebook?

Who really knows, but for the short term, the stock drop doesn’t really mean anything. The bigger picture is what preceded Facebook’s stock drop.

Facebook is reeling from scandals and regulations

The scandal from Cambridge Analytica was a really big deal. So much of a big deal for Facebook that Mark Zuckerberg had testify in front on the U.S. Congress and the European Union. And as anyone who watch those proceedings, Mark Zuckerberg was not happy about it.

But the real reason for this Facebook stock drop was the fact that Facebook has tightened up on its privacy policy.

If you advertise on Facebook, you know that you can target based on income, home value and other very juicy demographics. For many advertisers, they come to rely on those demographics. For instance, Dentists have targeted higher income people because they can afford their services and are more likely to see a dentist.

Also another demographic that local services have come to rely on was “likely to move.”

For real estate professionals, targeting by income and likely to move is crucial to the success of their campaigns.

Well, all that is about to change.

Facebook has recently announced that it is removing many of the demographics. Therefore, what this means is that many advertisers will see their ads not performing as well.

And when this happens, they will stop advertising all together. This is why Facebook’s earning report is lower than expected. And this is the reason why Facebook’s stock dropped on Thursday (July 27th, 2018)

Facebook lost several hundred millions users worldwide

Another reason for Facebook’s lower than expected earnings report is that Facebook has seen a drop in Facebook users. Depending on the source, Facebook lost several hundred millions users worldwide.

According to The Guardian, Facebook lost 3 million users in Europe alone. This is also in the wake of GDPR, which is the new privacy law that Europe instituted earlier this year.

GDPR stands for General Data Protection Regulation. This has put a pinch on many advertisers. Now, advertisers have to clearly spell out that they are collecting data (i.e. names, e-mails and phones) that could be used in future advertising.

There are many other aspects of GDPR that we won’t get into in this article. This article focuses on Facebook’s stock drop, but don’t despair…

Now is the time to invest in Facebook stock.

And speaking of Facebook’s stock drop, this is a great time to invest in Facebook. Let’s use Equifax as an illustration.  As Warren Buffet often says, you should invest when everyone else it running scared. Or in his own words, “Fearful when others are greedy and greedy when others are fearful.”

Back in September Equifax announced that there was a breach in their systems. The stock tumbled to $92.98 from $142.72 in just one week (9.7.2017 – 9.15.2017) before it started to recover.

Today (9.27.2018), the Equifax stock is at 123.25. If you had invested while everyone was running scared, you would have made a nice investment for yourself.

People should see Facebook’s stock drop as a great opportunity and nothing else.

Although it is significant to know that what caused Facebook’s stock drop was precipitated by big policy changes at Facebook, it’s more important to know the real reason and the Growth Earnings.

But those are just cosmetic. Facebook (just like Amazon) has mastered the art of people coming back to Facebook over and over. So, they will weather this storm.

The privacy issue is just a bump in the road.

By |2019-08-26T16:14:41+00:00July 27th, 2018|Categories: Facebook Advertising, Marketing 101|Tags: , |