It emerged in September that Mark Zuckerberg, founder and CEO of global social media giant Facebook, had vowed not to sell any of the company’s shares for the next year. This is seemingly as a reaction to the news on the 24th September that the company’s share price had fell a further 9.1% to $20.79. This was the largest drop in Facebook’s share prices since the end of July. The drop was blamed on claims which were made in France which stated that users’ private messages from 2009 were being made visible for the public to see on the site’s new ‘timeline’ feature.
The news of this possible error – which could have lead to embarrassment and outrage from Facebook’s millions of users – evidently panicked the stock market, and confidence in the company fell. The claims, however, are said by officials at Facebook to be incorrect. They reportedly looked into the alleged privacy infringements and found that users were actually just seeing old wall posts and mistaking them for private messages, mainly due to the different way that Facebook looked in 2009.
However, despite Facebook’s reassurances on this issue, the shares hit a record low at $17.55 later in the month. This is the latest piece of bad news for the company who has seen their shares consistently struggle ever since they went public in May of this year. In just the four months from then until September, the stock fell a drastic 45%. This has came as an unpleasant surprise to shareholders of the business, as well as people who saw an opportunity for spread betting once the company went public. Many people assumed that Facebook would follow in the footsteps of other online companies such as LinkedIn, and see a rise in the stock values.
However, various issues have created stumbling blocks for the social networking site. As well as concerns over users’ privacy as in the above case, technological developments have also arguably hindered them. The clear shift from people primarily accessing the site from PCs to instead using mobile devices is one example of this. The mobile apps do not feature any advertising as of yet; and with 1 in 9 Facebook users now reportedly using only the apps to access their accounts, this is obviously a concern for investors.
If these issues can be addressed then it can certainly be argued that there is still opportunity for Facebook’s fortunes to improve. It remains one of the most-used websites in the world and is a powerful social force. Zuckerberg’s decision can be viewed as a vote of confidence for the future of the company’s shares, as he seemingly has faith that their value will increase with time. Shareholders will be hoping that these troubles are, as Zuckerberg seems to be saying, only teething problems in the company’s presence on the stock market.
Written by Adam Barley – Adam has been writing articles for numerous different areas of interest for a couple of years now and has become and experienced writer for many sources.