The value of Snap’s cohort of public firms plummeted when the social media startup reported earnings last week. Snap lost more than 20% of its value after informing investors that the company expects a much smaller fourth quarter than the market expected. Snap’s Q4 top-line estimates are anticipated to weigh down by privacy changes to technology platforms and weak advertiser demand due to supply-chain difficulties. On Friday, Facebook’s shares dropped about 5% because of the Snap revelation.
Then came a horrible weekend of coverage for Facebook, which culminated in a Monday morning news dump when dozens of media outlets reporting on a cache of documents disclosed by a whistleblower. Given Facebook’s history of scandals, it is in the midst of what may be its most devastating reporting cycle yet. Shares of Facebook, on the other hand, are practically unchanged this morning, up or down 0.2 percent to 0.3 percent. It appears that investors are dismissing the reporting.
It is easy to make a sarcastic remark that public-market investors are more concerned about potentially poor economic results than, say, the company’s failure to deal with misinformation and political influence in India. However, much of today’s research focuses on issues that are important to businesses, such as Facebook’s waning hold on younger users. So, what exactly is going on here? It is possible that today’s news has already factored into Facebook’s stock price; the company’s stock is currently worth just under $326 per share, a long cry from its all-time high of $384.33 set earlier this year, implying that it has already lost a significant amount of value.
However, it is probably more accurate to argue that Facebook investors are reacting to recent disclosures, such as Snap’s bad news, rather than historical records indicating longer-term difficulties. That could explain why Facebook’s stock dropped Friday and is now flat, any increases in the wake of an ocean of negative reporting based on the company’s own explanations of its problems – leaked documents are powerful for that precise reason — must feel like success within Facebook’s halls, regardless of why Facebook’s shares are holding steady this morning. After the bell today, Facebook will release its earnings.