Can Facebook save itself? Maybe if it grows a pair
Yesterday Facebook’s stock got hit hard, the company lost over $100 billion in market cap after its earnings numbers weren’t as good as investors had hoped. That being said, the company just barely missed on its earnings.
Revenue came in at $13.23 billion in the second quarter, barely missing the $13.36 billion analysts expected.
But perhaps the numbers most Facebook shareholders were watching involved monthly active users (MAUs) and daily active users (DAUs). Analysts expected the company to report MAUs of 2.25 billion and DAUs of 1.49 billion, but instead Facebook reported MAUs of 2.23 billion and DAUs of 1.47 billion, again, missing estimates but still up 11 percent year-over-year for each.
The major sell-off that ensued is not just because of an earnings miss by the social media giant, but because of guidance provided by Facebook to investors that they expect slower revenue growth going into the next quarter as well. Why is that? Security.
As I’ve said on past calls, we’re investing so much in security that it will significantly impact our profitability,” Zuckerberg said. “We’re starting to see that this quarter.”
In my opinion, that’s certainly a good thing, but are security improvements really enough to save Facebook? The company has reinvented itself in the past: look back to 2012 shortly after Facebook went public when mobile was exploding and Facebook was lagging behind with subpar mobile apps and a ton of competition. Zuck & Co. made it a priority to fix the mobile experience–and they did, by revamping their mobile apps and making several large scale acquisitions including Instagram and WhatsApp.
It seems Facebook is following the same, or at least, a very similar playbook this time as it tries to reinvent itself after the Cambridge Analytica scandal and the beating it took for the platform’s role in the 2016 US presidential election. It’s investing heavily in security (e.g. tech to identify fake news, better data privacy features, etc) and people–but is that enough? I don’t think so. The problems Facebook is facing this time are much different than before.
In 2012, with regard to its subpar mobile apps, the problems were purely technical so throwing more resources, money, and experienced people at the problem made sense. In terms of the company’s growth problem in 2012, it had a lot of growing competition in key areas of its business–photos and messaging being two of those places so it went out and acquired the two best apps in the space to diversify itself and secure more growth.
It’s not that simple this time.
The problems Facebook is facing in 2018 do have a technical aspect to them, but there’s also a new element being introduced: company policies. And to date, Zuck & Co. have yet to take a stand on anything or set any clear and concise policies for its platforms.
Facebook reinvented itself for mobile… can it reinvent itself again? My hot take: Not if it doesn’t start taking a stand on things, like you know, nazis being bad.
— Jeff Weisbein (@jeffweisbein) July 26, 2018
How a fellow jew can come out and say that Holocaust deniers have a right to utilize his platform to spread hate and lies, I’ll never understand. It seems Zuck is too busy trying to make everyone happy. I sincerely hope he isn’t planning on running for president because if this is any indication of how he handles things like nazis, racists, bigots, etc, then he’s really no better than Trump.
To Zuck: you can’t make everyone happy–it’s literally impossible, but you absolutely can create platforms that aren’t home to real fake news or nazis.