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Analysis: Wall Street sends a clear message to Facebook

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analysis:-wall-street-sends-a-clear-message-to-facebook-–-cnn

New York (CNN Business)The release of “The Facebook Papers” is a huge black eye for the social media company, one that could lead to even more calls from regulators and politicians in Washington to break up Facebook.

“The Facebook Papers” are a trove of internal Facebook documents based on disclosures made to the Securities and Exchange Commission and provided to Congress by whistleblower Frances Haugen’s legal counsel. The redacted versions were obtained by a consortium of 17 news organizations, including CNN.

Wall Street is clearly sending a message to Facebook: Investors are displeased with the company’s direction. Shares have pulled back from their all-time highs. The stock fell 5% this past Friday alone and is now more than 15% below the peak price it hit earlier this year.

It’s just the latest in what seems like a never-ending saga of screwups and bad headlines for Facebook. Investors, lawmakers, advertisers and users are increasingly furious with Facebook, signaling it might be time for a change in leadership.

The Wall Street Journal previously published a series of stories based on tens of thousands of pages of internal Facebook documents leaked by Haugen. (The consortium’s work is based on many of the same documents.)

Facebook stock has lagged the other FAANGs

The latest revelations further threaten to dampen investor enthusiasm for the social media giant. Facebook’s stock has not done nearly as well as most other top tech stocks.

Over the past two years, Facebook has actually lagged the Nasdaq’s 83% gain by a bit. It’s also trailing the performance of Apple and Alphabet by a wide margin.

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Facebook’s shares are up nearly 75% since October 2019, compared to a surge of more than 140% for Apple (AAPL) and nearly 120% for Google owner Alphabet (GOOGL). In fact, Facebook’s shares have trailed all the FAANGs (which also includes Amazon (AMZN) and Netflix (NFLX)) as well as Microsoft (MSFT) and Tesla (TSLA), during the past 24 months.

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So maybe there is a need for Facebook to really shake things up given that the stock has been the worst performer of the giant techs of the Nasdaq.

Facebook, which also owns Instagram, WhatsApp, Messenger and Oculus, will report earnings after the closing bell Monday and is widely expected to announce a corporate rebranding that will focus on the company’s growing clout in the so-called metaverse.

Big changes might be needed to silence Facebook critics

Will that be enough to distract investors from the revelations made in “The Facebook Papers”? It doesn’t seem likely, even though profits for the third quarter are expected to rise 18% from a year ago.

So it may be time for Zuckerberg to cede more control of the company to an outsider. Naming chief operating officer Sheryl Sandberg as CEO may not be enough to satisfy skeptics. Given Sandberg’s long tenure with Facebook, critics might not view a promotion for her as a drastic enough change.

But given that Zuckerberg owns shares of the company that have 58% of the voting rights, any change will likely need to be one that Zuckerberg initiates. Pressure from other investors may not be enough.

“It would help if Zuckerberg gave up control but I’m not sure how likely that is,” said Bryan Koslow, principal of Clarus Group, an investment firm that owns Facebook through exchange-traded funds.

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Koslow said spinning off Instagram and other measures to break up Facebook could be a start.

“There is a bull’s eye on Facebook’s back. They have these products and services that are considered to be addictive,” he added.

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Still, one Facebook shareholder said that until users and advertisers start to leave Facebook in droves, little may change.

“Management’s response to the news flow remains disappointing,” said Daniel Morgan, senior portfolio manager with Snyovus Trust, in an email. “However, the impact of negative press on advertiser spending has been limited in the past, given the platform’s broad reach.”

And Wall Street analysts are following the advertiser money — not the never-ending sea of unflattering headlines about the company.

Along those lines, the consensus price target for Facebook stock is about $417 a share, nearly 30% higher than current levels. According to Refinitiv, 48 analysts have Facebook stock rated a “buy” while only seven have a “hold” on it and just two recommend that investors “sell.”

Facebook has weathered tons of negative publicity before. This time actually might be different.

But unless Facebook customers and users show they truly have had enough — in a manner that impacts ad revenue, earnings and the stock price in a much more meaningful way — then there may be little incentive for Facebook to change its stripes.

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Facebook fighting against disinformation: Launch new options

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Meta, the parent company of Facebook, has dismantled new malicious networks that used vaccine debates to harass professionals or sow division in some countries, a sign that disinformation about the pandemic, spread for political ends, is on the wane not.

“They insulted doctors, journalists and elected officials, calling them supporters of the Nazis because they were promoting vaccines against the Covid, ensuring that compulsory vaccination would lead to a dictatorship of health,” explained Mike Dvilyanski, director investigations into emerging threats, at a press conference on Wednesday.

He was referring to a network linked to an anti-vaccination movement called “V_V”, which the Californian group accuses of having carried out a campaign of intimidation and mass harassment in Italy and France, against health figures, media and politics.

The authors of this operation coordinated in particular via the Telegram messaging system, where the volunteers had access to lists of people to target and to “training” to avoid automatic detection by Facebook.

Their tactics included leaving comments under victims’ messages rather than posting content, and using slightly changed spellings like “vaxcinati” instead of “vaccinati”, meaning “people vaccinated” in Italian.

The social media giant said it was difficult to assess the reach and impact of the campaign, which took place across different platforms.

This is a “psychological war” against people in favor of vaccines, according to Graphika, a company specializing in the analysis of social networks, which published Wednesday a report on the movement “V_V”, whose name comes from the Italian verb “vivere” (“to live”).

“We have observed what appears to be a sprawling populist movement that combines existing conspiratorial theories with anti-authoritarian narratives, and a torrent of health disinformation,” experts detail.

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They estimate that “V_V” brings together some 20,000 supporters, some of whom have taken part in acts of vandalism against hospitals and operations to interfere with vaccinations, by making medical appointments without honoring them, for example.

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Change on Facebook

Facebook announces news that will facilitate your sales and purchases on the social network.

Mark Zuckerberg, the boss of Facebook, announced that the parent company would now be called Meta, to better represent all of its activities, from social networks to virtual reality, but the names of the different services will remain unchanged. A month later, Meta is already announcing news for the social network.

The first is the launch of online stores in Facebook groups. A “Shop” tab will appear and will allow members to buy products directly through the group in question.

Other features have been communicated with the aim of facilitating e-commerce within the social network, such as the display of recommendations and a better mention of products or even Live Shopping. At this time, no date has been announced regarding the launch of these new options.

In the light of recent features, the company wants to know the feedback from its users through the survey same like what Tesco doing to get its customers feedback via Tesco Views Survey. However, the company is still about this feedback will announce sooner than later in this regard.

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