Facebook shares suffered a 4.5% decline over the course of Monday’s trading session (25), reaching the worst result since November last year. It was a tumultuous day, marked by the return of Mark Zuckerberg to the post of CEO, from which he was away on parental leave, and for the resolution of conflicts at the hands of the company’s founder himself.
At the center of the tensions that have led to an apparent reduction in investor reliability are political and control issues of the company. First, the news that Facebook delivered to the US Congress last Thursday (21), data on three thousand ads made on the platform during last year’s elections, supposedly made from false profiles based in Russia.
It is a collaboration between the social network and the ongoing investigations into possible Kremlin interference in the results that led Donald Trump to the presidency of the United States. The social network is constantly cited in this process as one of the great vectors of manipulation of public opinion in an operation orchestrated by hackers working under Russian government funding to control the outcome of the American elections.
At the same time, a lawsuit filed by investors who were concerned about the devaluation of their shares by the issuance of new Class C shares, which generate income, but did not give the owners the right to vote, also came to an end. For the claimants, the separation of decision-making power and economic interests would be damaging to the company – since the proposal would further increase the company’s capital, but without its founder and CEO reducing its own control.
As part of the deal, the CEO gave up the plan to open new shares. Instead, it has promised to sell between $ 35 million and $ 75 million of its own quotas over the next 18 months to finance the operation of the Chan Zuckerberg Initiative, an organization that uses technology to address social issues such as bureaucracy in use of public services and the difficulty of access to information in emerging countries.
For analysts, Facebook’s growing involvement in the investigation of the 2016 US election can be viewed with a vengeance by the White House. Given Donald Trump’s revengeful impetus, this could mean a reduction in federal support for the social network and a possible increase in scrutiny of norms and regulations.
In addition, a dilution of the very amount of stock also got bad for the market. Usually, the possession of a fair amount of quotas by executives of the same company would be a sign that everything is going well and there is trust in the future, whereas the opposite, as announced by Zuckerberg in response to the process, is seen in the opposite direction. The news that the CEO was willing to dilute his own share to focus on his own initiatives did not go very well.
It also did not help the fact that the entire technology market hit low this week. The Nasdaq index closed 0.9 percent lower on Thursday, while Standard & Poor’s 500 daily stock index also closed down 1.4 percent on Monday.
Despite the fall, there is no reason for red alert. For experts, the fall in share prices was accompanied by a transaction volume three times greater than the last 30 days for Facebook, with a balanced operation between sale and purchase. This means that there is interest and the movement represents more the market readjusting than a mass exit of investors worried about the future of the social network.