In what could be the biggest one-day case, Facebook shares opened at $ 174.89, down 19.6 percent compared to yesterday's closing price of $ 217.50 (NASDAQ: FB).
In terms of market value, Facebook was worth $ 629.6 billion yesterday. The company is now worth $ 506.2. In other words, Facebook has lost $ 123.4 billion in value overnight.
Today's performance is not yet due to a data abuse or election-disturbing scandal. The company has reported disappointing earnings. For the first time, Facebook's growth is rising.
There are hardly more people checking Facebook every day compared to the previous quarter. Worse still, Facebook's user base shrunk in Europe. Facebook is still growing, but it is clear that GDPR combined with a saturated market does not help the company.
Therefore, Facebook is trying to change the story. For the first time, the company shared a new "family of apps audience" metric. There are 2.5 billion people who use at least one of the company's app ̵
Obviously, Facebook believes Instagram and ephemeral stories represent the future of the future. But this will be a question mark in the coming months, as it is unclear whether Instagram can generate as much money as Facebook's main application.
Measuring Facebook's loss
$ 123,400,000,000 is a large number. It is difficult to understand how much it represents given the scope of big tech companies. As TechCrunch's Jon Russell pointed out, bitcoin's total market value is currently $ 141 billion. So that's like almost all bitcoins disappeared overnight.
Who would think Facebook could be more volatile than bitcoin?
Even if you compare it with significant technical companies, this is a big loss. For example, Netflix is worth $ 158 billion right now. Twitter's market value is only 33 billion dollars. It's like Facebook shaved by almost 4 Twitters in the market cap overnight. And I do not even talk about Snap, which is only worth $ 17 billion.
Change Facebook's Business Model
Most have been focused on Facebook's loss for now. It's a dizzying experience. But it's time to look at Facebook's business model and understand what's going on.
Facebook is an amazing success story. It became a huge business in just a few years. But the company has a dangerous business model. Thousands of employees are looking for ways to collect more data. Business groups can then sell expensive ads because they are perfectly targeted.
And the best way to optimize your effective ads is by making addictive products. If you spend more time watching stories, you will be exposed to more ads.
Therefore, Facebook optimizes for engagement. You get furious, you get sad, you like and you share. And Facebook earns money.
This year is a turning point for Facebook. People will look back at this moment as a buoyancy place in the company's lane. But it is still unclear whether Facebook has responded to its structural problems.