Facebook stock plunges on news feed overhaul
The company is planning to change the filter for its news feed to prioritize what friends and family share, while reducing the amount of non-advertising content from publishers and brands. The measure is a part of a wider program aimed at prioritizing “meaningful social interactions” against “relevant content.”
“We feel a responsibility to make sure our services aren't just fun to use, but also good for people's wellbeing,” Zuckerberg said in a post on his Facebook page.
The step is seen as a deep concern for publishers, as the feed is a massive source of traffic and revenue. If the pre-market declines in shares hold, Facebook will lose nearly $23 billion from its market capitalization on Friday as a result of the move, Reuters reports.
According to Zuckerberg, the time spent on Facebook will go down, but “will be more valuable.”
Shares in the social networking service have gained 48 percent over the last year, and could grow another 18 percent to $213 per share, according to analysts polled by Bloomberg. The company is set to report earnings on January 31.
According to some analysts, the measure won’t drag Facebook down due to its strong monetization, formed by a monthly active user (MAU) base of more than 2 billion.
“Facebook will continue to grow its massive global installed base in our opinion while importantly monetizing users especially on the Instagram side of the house, which remains the 'core 1-2 punch' that underlies our bullish thesis on the name,” said Daniel Ives, head of technology research at GBH Insights, as quoted by CNBC. According to the expert, the company’s stock may grow up to $225.
For more stories on economy & finance visit RT's business section