Wall Street not a fan of Facebook’s new News Feed

Facebook’s latest changes to its News Feed left investors searching for a dislike button.

Shares of the social network plunged 4.5 percent on Friday, to $179.37, one day after the company said it would prioritize posts from friends over posts from publishers and businesses.

The changes could lead to a short-term drop in engagement — and cause a decline in ad revenue.

“Now, I want to be clear: by making these changes, I expect the time people spend on Facebook, and some measures of engagement, will go down,” Facebook founder and CEO Mark Zuckerberg warned in a posting on the social media platform Thursday evening.
The billionaire Facebook founder was sort of forced into the changes after the social media giant was knocked for having its algorithms prioritize misleading news in people’s feeds — a phenomena that was aimed at swaying the 2016 election.

Facebook reported ad revenues of $10.1 billion in the third quarter — a 49 percent increase from the prior year’s quarter.

Wall Street — not surprisingly — was not pleased to hear the social media darling casually hint at losing momentum.

“This announcement injects incremental near-term uncertainty into Facebook’s ad revenue growth this year, which will make Facebook’s a show-me story over the next few quarters,” Brian Nowak, analyst at Morgan Stanley, said in a note Friday.

But others on the Street saw Friday’s drop as a reckoning more than a year in the works.

“2017 was a really bad year. At some point all of these bad things will play out,” Brian Wieser, analyst at Pivotal Research Group, told The Post.

Although Facebook’s stock soared 53.4 percent in 2017, the company was also forced to admit that nearly 126 million users were served up Russia-linked ads and content during the 2016 Presidential election.

Last month, former Facebook exec Chamath Palihapitiya said the company’s tools are “ripping apart the social fabric of how society works.”

Many on Wall Street are expecting the hit Facebook will take to be only a shortterm problem.

Media companies are expected to be negatively affected as their news content is downgraded in terms of priority.

Source: https://nypost.com/2018/01/12/wall-street-not-a-fan-of-facebooks-new-news-feed/

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