Mark Zuckerberg’slatest Facebook postis proving to be expensive.
The co-founder of the world’s largest social-media business saw his fortune fall by around$US3.3billion ($4.2 billion) after he posted plans to shift users’ news feeds toward content from family and friends at the expense of material from media outlets and businesses.
Shares of Facebook tumbled 4.5per cent on Wall Street, cutting Zuckerberg’s fortune to around $US74billion on the Bloomberg Billionaires Index, resulting in him he losinghis place as the world’s fourth-richest person to Spanish retail billionaire Amancio Ortega.
The drop wipes out much of the $US4.5 billion Zuckerberg,33, has added so far this year. The world’s 500 richest people gained $US1 trillion in 2017 and an additional $US17 billion in the first two weeks of 2018, according to the Bloomberg index. Amazon CEO Jeff Bezos remains in top spot on the list with a fortune of$US108b, followed by Bill Gates and Warren Buffett.
DespiteFacebook’s move to prioritise content from family and friends,several analysts said they doubt it will have significant impact on the company’s tremendous advertising revenue. On the contrary, some were encouraged by Zuckerberg’s recognition that customer satisfaction had already begun to slip recently and his attempt to woo back users in an environment where many have become turned off to technology and social media.
Advertisers will keep ponying up to reach Facebook users who are happier to be on the site, engaging with family and friends and less encumbered with noise – or so the argument goes.
“We believe these changes will be beneficial to Facebook in the medium and long term,” said Mark Mahaney, an analyst at RBC who rates the shares a buy.
“In our view, making the feed more relevant should boost user and engagement growth over time. Facebook is making the service more social and less media, and that’s likely a positive for the vast majority of users.”
In announcing the changes, Facebook CEO Mark Zuckerberg said he wants to make the social media behemoth “good for people.” Photo: NAM Y. HUH
Ad dollars will continue to pour into social media and search feeds, and only Alphabet’s Google currently has the kind of global reach that Facebook has, which means advertisers have no other alternatives in the near-term, said James Cakmak, an analyst at Monness Crespi Hardt & Co.
Facebook had already been seeing slowing advertising growth, with properties like Instagram contributing an increasing proportion. Facebook’s users had also been showing signs of slipping satisfaction, as thecompany confronted the fake news scandal and pervasive negativity.
“Shrinking supply makes the opportunity to get in front of your target audience that much more valuable,” Cakmak said.
Analysts believe that the changes will be beneficial to Facebook’s revenue in the ‘medium and long-term’. Photo: David Paul Morris
“The top brands in the entire world that currently rely on digital channels will continue to rely on digital channels, and nothing is changing in terms of consumer behaviour shifting from analogue to digital.”