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Time for Facebook to 'Get Back Investors on Board' – Strategy Officer

13:45 GMT, 28 July 2018
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Facebook has lost over $100 billion of its market value as the company announced a slowdown in user growth. The plunge comes as the company revealed that three million users in Europe had left the social network after the Cambridge Analytica scandal. Sputnik spoke with Daniel Ives, chief strategy officer at GBH Insights, about the issue.
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Sputnik: What is the real extent of correlation between Facebook's share plunge and Cambridge Analytica scandal?

Daniel Ives: They have specific challenges just in terms of user growth, engagement on the platform and advertising, which is their break and butter – that’s how they got to a $50 billion annual advertising fortress. Cambridge […] has added to the headwind and I think that confluence of events all sort of hit this past quarter, and that just really blindsided [Wall] Street in terms of just how negative it was.

Sputnik: To what degree does the increase of Facebook’s expenses in the wake of the scandal make the company less attractive to investors. What’s your take on that?

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Daniel Ives: I think investors are more focused on user groups engaging in advertising rather than them spending more in terms of margin scores. I think that wasn’t the biggest shock value –it really just comes down to the underlying growth metrics that they guided for. They are going to go to 20,000 employees focused on security, so obviously post Cambridge there is a massive increase in expenses. The more worrisome thing for investors is really about user growth. 

North America has been stagnant. […] across Europe. And I think now it’s a huge groovy period for Zuckerberg and Facebook to get investors back on board.

Sputnik: Experts are saying that Facebook could rely more on Messenger, Instagram, WhatsApp, you have mentioned those platforms in terms of increasing revenues – how much of a potential do these apps have as an advertising platform? 

Daniel Ives: The best thing they have going for them is Instagram. Instagram has been the crown jewel of the platform – just massive growth. The question is can that growth be used to equalize some of the soft spots that they are seeing on the core platform.

Those are the things that they have going well. The big issue is what’s happening on the core platform in terms of slowing user growth and engagement in advertising. That’s what they have to fix in the coming six to nine months, to make sure that this is just a big speed bump, rather than hitting a brick wall.

The views and opinions expressed by Daniel Ives are those of the strategy officer and do not necessarily reflect those of Sputnik.

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