Tech Investors Start To Panic As Facebook’s Stock Price Plunges More Than 20 Percent
Is this the beginning of the fall of Facebook? After announcing disappointing numbers for the second quarter on Wednesday, Facebook’s stock price plunged more than 20 percent in after-hours trading.
If that decline holds on Thursday, it will be the biggest stock price drop in Facebook’s entire history. But the truth is that we will probably see the stock price bounce back a bit, because Wednesday’s crash was almost certainly an overreaction. Unlike many other tech companies, Facebook is still making lots of money, and the number of users globally is still growing.
However, there are definitely some huge red flags. In the U.S. and Canada the number of users is stagnant, and in Europe the number of users is actually declining. Facebook’s user base is aging as many young people abandon the platform for trendier alternatives, and there is a growing backlash among conservatives against the tremendous censorship that we have seen in recent months. People are hungry for an alternative, and if something more appealing comes along Facebook could ultimately suffer the same fate as MySpace very rapidly.
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