After social media company Snap reported earnings last week, the value of its cohort of public companies fell sharply.
Snap shed more than 20% of its value after telling investors that it expects a far smaller fourth quarter than the street anticipates. Privacy changes to technology platforms and weak advertiser demand thanks to supply-chain issues are likely to weigh on Snap’s Q4 top-line expectations.
Facebook stock fell around 5% on the Snap news on Friday.
And then Facebook had a difficult weekend of coverage, a period that flowed into a Monday-morning news dump concerning the company as dozens of media organizations began reporting on a trove of documents released by a whistleblower. Facebook is in the midst of what is perhaps its most damning reporting cycle to date, a bit of a high-water mark given the social company’s history of scandal.
This morning, however, shares of Facebook are essentially flat, trading up or down 0.2% to 0.3%. Investors are shrugging off the reporting, it appears.
It would be easy to make a somewhat cynical comment that public-market investors were more concerned about potentially lackluster business results than they are about, say, the company’s inability to handle misinformation and political manipulation in India. But a good chunk of today’s reporting deals with things that do matter in business terms, like Facebook’s slowly declining grip on younger users. So, what’s going on?
It may be that today’s reporting was priced into Facebook’s stock already; the company, worth just under $326 per share this morning, is far from its all-time high of $384.33 that it set earlier this year, indicating that it has already given up quite a lot of value.
But it may be most fair to say that Facebook investors are simply reacting to new disclosures — like Snap’s bad news — more than historical documents outlining longer-term issues. That would explain why Facebook fell Friday and is flattish today.
Regardless of why Facebook’s shares are holding steady this morning, any gains in the wake of an ocean of negative reporting based on the company’s own descriptions of its problems — leaked documents are powerful for that very reason — must feel like a win inside of Facebook’s halls.
Facebook reports earnings today after the bell.
