After peaking at $380 last month, Facebook (NASDAQ:FB) fell and failed to recover. The NASDAQ’s mild correction ended this month but investors are leaving Facebook out. What happened?
A whistleblower exposed the harmful effects of Instagram on teenage girls. This is harming Facebook’s public image and decreasing its brand value. Plus, users may look at Instagram as "yesterday’s playground." This will encourage teens to dump the site and spend more time on TikTok or Snapchat (NYSE:SNAP) instead.
Talk of Facebook changing its name is also a negative development. The firm may follow Google’s Alphabet (NASDAQ:GOOGL) name change for legal and tax purposes. Still, markets are lowering their value of the Facebook name in light of the whistleblower’s accusations.
Former U.S. President Donald Trump’s social medial launch, through a Special Purpose Acquisition Companies (SPAC), is dampening Facebook’s value, too. Trump’s new media network, called Trump Media & Technology Group, will have a non-Woke media platform, TRUTH Social. Markets over-bid on shares of Miami-based Digital World Acquisition (NASDAQ:DWAC). They speculate that this site will take on Facebook, Instagram, and Twitter (NYSE:TWTR).
The chances of TRUTH Social growing like a TikTok and taking Facebook or Instagram users is very low. Facebook has plenty of cash and brand strength. It survived a boycott. Advertisers are not going to leave the platform, either.
