Investors shouldn't panic. Facebook will bounce back

Facebook investors are freaking out. They shouldn't be.The stock ...

Posted: Jul 26, 2018 8:33 PM
Updated: Jul 26, 2018 8:33 PM

Facebook investors are freaking out. They shouldn't be.

The stock fell as much as 19% on Thursday after the company warned that revenue growth will slow as it focuses more on privacy. And that's exactly what Facebook should be doing after the Cambridge Analytica debacle.

Facebook is also taking advantage of its strength to invest more in its Stories feature - the sharing of videos and photos, not just on Facebook but on Facebook-owned Instagram, WhatsApp and Messenger.

Keep in mind that Facebook shares closed Wednesday at an all-time high just before the company shocked investors with its announcement.

Related: Facebook stock is on track for its worst day ever

BTIG analyst Richard Greenfield wrote in a report Thursday that media executives "should not be rejoicing - they should be afraid, very afraid."

"Facebook is actively choosing to make less money, deprioritizing near-term monetization to drive engagement to even higher levels to capture even more of their 2.5 billion monthly users' time and attention," he wrote.

Translation: Facebook can afford to make moves that will hurt it now because they should pay off down the road. It's a strategy that has worked for Amazon and Google, too.

Mizuho tech analyst James Lee said the shift away from the News Feed and more toward Stories "creates a near-term risk," but that "it's not a structural problem."

Related: Facebook stock plunges and is on track for worst day ever

Investors also shouldn't be all that surprised by Facebook's decision to absorb short-term pain in hopes of a huge long-term gain. It has done just that a couple of times before, and the moves have paid off.

In 2014, Lee noted, investors were worried about Facebook's ability to shift from a predominantly desktop platform to mobile. And in 2016, investors questioned Facebook's ramping up its video investments.

Both times, Facebook had the last laugh.

Despite the big drop Thursday, the stock is up more than 400% in the past five years. That's better than Apple and Google.

The broader market also brushed off Facebook fears. Facebook is one of the largest companies in the world, but investors seemed to think the short-term challenges were limited to it and maybe some other social media companies.

The Dow rose modestly and the S&P 500 was flat as investors cheered positive trade developments from President Donald Trump and European Commission President Jean-Claude Juncker.

Even the Nasdaq wasn't down all that much - less than 1%. And the so-called FANG stocks didn't take much of a hit. Amazon, which will report earnings after the close Thursday, and Google owner Alphabet, which posted stellar earnings earlier this week, were down just 1%.

Facebook's social media rivals Twitter and Snapchat fell only 3%.

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 73287

Reported Deaths: 3036
CountyConfirmedDeaths
Marion15701725
Lake7496275
Elkhart480184
Allen3835163
St. Joseph342381
Hamilton2723104
Vanderburgh192213
Hendricks1871108
Cass17869
Johnson1741118
Porter129439
Clark120247
Tippecanoe118911
Madison94365
LaPorte89430
Howard88465
Kosciusko84712
Bartholomew78047
Marshall77422
Floyd77246
Monroe74630
Delaware71452
Dubois68712
Boone67246
Noble66329
Hancock64738
Vigo61910
Jackson5855
Warrick57930
LaGrange55710
Shelby54627
Grant52630
Dearborn49628
Morgan46734
Clinton4303
Henry37620
Wayne36810
White36110
Montgomery35221
Lawrence34227
Decatur33532
Harrison32723
Putnam2868
Miami2692
Scott26610
Daviess26420
Greene24634
Franklin24114
Jasper2342
DeKalb2304
Jennings22412
Gibson2214
Steuben2073
Ripley1997
Fayette1867
Carroll1852
Perry18412
Starke1777
Posey1700
Orange16924
Wabash1653
Fulton1642
Wells1622
Jefferson1602
Knox1510
Whitley1516
Washington1391
Tipton1379
Spencer1313
Huntington1223
Newton11810
Randolph1184
Clay1165
Sullivan1131
Adams962
Jay910
Owen871
Pulaski791
Rush764
Brown731
Fountain732
Blackford632
Ohio635
Benton610
Pike530
Parke511
Vermillion490
Switzerland460
Crawford440
Martin430
Union390
Warren221
Unassigned0202

Ohio Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 99969

Reported Deaths: 3668
CountyConfirmedDeaths
Franklin18182523
Cuyahoga13414499
Hamilton9583255
Lucas5288323
Montgomery431894
Summit3523222
Marion292245
Butler289163
Mahoning2532255
Pickaway238342
Stark1813139
Warren176739
Lorain173678
Columbiana165660
Trumbull1518106
Fairfield136732
Delaware129219
Licking126049
Clark114214
Lake111138
Wood103058
Clermont92111
Medina91435
Miami83238
Tuscarawas78114
Portage75461
Allen73244
Greene68412
Belmont62126
Mercer60513
Richland60012
Erie57027
Ashtabula56246
Geauga55444
Wayne52958
Ross4684
Huron3955
Darke39329
Ottawa37726
Sandusky37316
Hancock3723
Athens3561
Madison35510
Holmes3276
Lawrence2790
Auglaize2506
Union2461
Muskingum2251
Jefferson2242
Scioto2241
Putnam20517
Seneca2043
Knox2037
Washington20222
Preble2012
Coshocton1926
Shelby1904
Crawford1745
Champaign1732
Morrow1682
Hardin16412
Clinton1626
Highland1561
Logan1522
Fulton1471
Wyandot1458
Ashland1433
Defiance1424
Williams1343
Brown1272
Perry1233
Guernsey1167
Henry1162
Hocking1169
Fayette1120
Carroll1115
Monroe9118
Pike760
Jackson740
Van Wert711
Paulding670
Gallia651
Adams592
Meigs380
Vinton312
Harrison261
Morgan250
Noble170
Unassigned00
Fort Wayne
Clear
72° wxIcon
Hi: 86° Lo: 68°
Feels Like: 72°
Angola
Clear
68° wxIcon
Hi: 86° Lo: 68°
Feels Like: 68°
Huntington
Scattered Clouds
67° wxIcon
Hi: 86° Lo: 68°
Feels Like: 67°
Decatur
68° wxIcon
Hi: 85° Lo: 69°
Feels Like: 68°
Van Wert
68° wxIcon
Hi: 83° Lo: 68°
Feels Like: 68°
Storms return for Monday
WFFT Radar
WFFT Temperatures
WFFT National

Community Events