While Facebook grapples with an explosion in overhead, expensive regulations in Europe (and possibly soon in the U.S.), a staggering decline in traffic, backlash over conservative purging and pedo questionnaires, and a former executive who went public in December with his "tremendous guilt" over helping to hook people on the "internet crack" that is social media - the Silicon Valley behemoth is facing a new challenge; a 24% drop in the average time spent on the site.
Now new numbers have been released that go through December, and the problem only seems to be getting worse. The updated data shows that Facebook’s core platform lost 18% in time spent, which is a huge change from the month before. This, says Pivotal, reflects a 24% decline in time spent per person.” Instagram, too, saw some poor engagement numbers. Though aggregated consumption went up, the user base went up at a higher clip, meaning that time per person went down 9%. -Fast Company
Recent changes to Facebook's algorithms which prioritize posts from friends and family over promotions have been blamed for lower engagement - as Zuckerberg warned shareholders about in January.
Perhaps that's why CEO Mark Zuckerberg and other insiders are dumping shares?
Zuckerberg isn’t the only insider to sell Facebook stock during February, however. SEC filings reveal a long list of other insiders who also sold FB stock. VP David Fischer converted some restricted stock units this month and sold thousands of shares, including about 18,000 shares this week as part of his prearranged trading plan.
Other insiders who have converted and/ or otherwise moved around some FB stock this month include Chief Operating Officer Sheryl Sandberg, Chief Financial Officer David Wehner, director Kenneth Chenault, Chief Technology Officer Michael Schroepfer, General Counsel Colin Stretch, Chief Product Officer Christopher Cox, and director Jan Koum. That’s quite a list, as usually insider sales of Facebook stock occur on a much smaller scale, based on the regulatory filings of insider transactions. -Yahoo! Finance
Former Blackrock manager Ed Dowd of OceanSquare Asset Management - currently short the stock, thinks the "drumbeat of regulations" will put a dent in Facebook shares.
WE are short $FB & $GOOG at end of close today on technicals and the deafening drumbeat of regulations coming from both the left and right. Each side has differing motives but any regulation will lower multiples. pic.twitter.com/6DMXUNGy8u— Ed ☯️ (@DowdEdward) February 27, 2018
"Facebook has hired 14,000 people working on “community safety” to prevent “Fake News”," notes Dowd. "They will be at 20,000 people by end of 2018. That is an absurd amount of overhead. FB opex/capex combined was +37% in 2017. They are guiding it to +45-60% in 2018!"
Perhaps users took former Facebook exec Chamath Palihapitiya's advice from December to heart. Palihapitiya - Facebook's VP for User Growth who left after a decade with the company, told a group of students at the Stanford Graduate School of Business that he feels "tremendous guilt" for his role in building the social media giant and warned that "if you feed the beast, that beast will destroy you..." (you can view the relevant portion of the interview here).
Palihapitiya went on to criticize not only Facebook, but Silicon Valley's entire system of venture capital funding saying that investors pump money into "s**tty, useless, idiotic companies," rather than addressing real problems. Palihapitiya currently runs his own VC firm, Social Capital, which focuses on funding companies in sectors like healthcare and education.
You can watch Palihapitiya's full interview below: