Why the Facebook share price is not getting too many likes today
Shares in the US social media giant tumbled nearly 5% overnight.
Facebook Inc. (NASDAQ: FB) has long been an investor favourite and has been one of the best performing technology shares on the NASDAQ. But the stock stumbled in US trading on Monday, falling nearly 5% to US$326.23, its worst daily loss since November 2020.
Why did the Facebook stock price slide?
The social media giant’s shares tumbled after its 3 main services Facebook, Instagram and WhatsApp suffered a major outage for more than 6 hours overnight that left users frustrated.
Outages are not unknown for tech companies but this was one of Facebook’s worst outages in the last 10 years, with services across its entire suite of products going offline. The tech giant struggled to even bring its own internal services back online.
It did not disclose the cause of the outage, but Facebook’s chief technology officer Mike Schroepfer apologised to users in a statement on rival platform Twitter noting the teams were working as fast as possible to restore services to customers.
The experience left investors concerned, resulting in a share price slide.
While there would have been obvious loss of advertising revenue for the group during the downtime, social media companies can ill afford their services being down for several hours as this could be enough to shift some users toward competing services such as Twitter, NextDoor, Telegram and TikTok.
A network monitoring service owned by Cisco said the outage was the result of Domain Name System (DNS) failure. Most services looked to have been restored at the time of writing (Tuesday morning AEST).
The outage comes at a time of immense scrutiny for the social media giant.
Facebook has been under pressure in recent weeks after a former employee turned whistleblower accused it of “prioritising their own profits over public safety”. Frances Haugen is said to deliver testimony in the US Senate on Tuesday.
Facebook has come under increasing scrutiny from lawmakers globally for hosting misinformation and harmful speech. The company also recently put on hold plans to offer a version of Instagram geared toward children after a blowback from consumer protection advocates.
Investors have voiced concerns over governance issues and regulatory tangles being faced by the company, which has pushed at least some institutional investors to trim the Facebook holdings in their portfolios.
The company hit a market capitalisation of US$1 trillion in June but the shares have stalled since then. The stock is up just 5.6% in the last 6 months.
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