Big Tech shares took a dive Monday as concerns about inflation pushed investors to cut back their exposure to the sector. Facebook — which suffered several hours of outage across all its products, including Instagram and WhatsApp — fared the worst.
The social media giant’s stock dropped nearly 5%, with Facebook shedding tens of billions in market cap value as looked to calculate what lasting damage to the site could look like. It was the stock’s worst day all year. Microsoft shed about 2% while Apple lost 2.5%.
Messenger, Oculus VR, and Facebook’s internal communications tools also stopped working, making it the company’s largest outage in history.
The company confirmed theories that the outage was caused during a routine update to its Border Gateway Protocol (BGP) records.
More than 3.5 billion people use Facebook’s platforms to conduct business and communicate with friends and family.
“Sorry for the disruption today—I know how much you rely on our services to stay connected with the people you care about,” Mark Zuckerberg wrote when the sites had been restored.
Facebook stock has been on a tear in 2021, reaching a $1 trillion market cap in early July, though the share price has stalled in recent months with the market cap currently resting just south of $920 billion.
The leak
Before taking a fall, Facebook had already been generating negative headlines.
The Wall Street Journal recently published a damning series revealing that the company’s own research indicated it was causing social harm. Leaked internal documents showed the company knew about the damage Instagram was causing to teen girls, and that changes to Facebook’s algorithm in 2018 ended up surfacing more divisive content, not less.
Also Read: Stocks Record Their Worst Month of the Year
On Sunday night, former Facebook product manager Frances Haugen, who leaked the documents to the WSJ and the SEC, went on “60 Minutes” to argue that the company was prioritizing engagement over user safety.
“The thing I saw at Facebook over and over again was there were conflicts of interest between what was good for the public and what was good for Facebook, and Facebook over and over again chose to optimize for its own interests,” Haugen said.
Facebook shares, which had already been sliding after Haugen revealed herself to be the whistleblower, fell more than 5% Monday.
Facebook stock down but not out
As it turns out, none of this is good news for the company — and yet shares are rebounding 1.5% in premarket trading Tuesday.
While public sentiment has sharply turned against Facebook in recent years, Wall Street has continued to reward its money-making prowess.
Facebook doubled its profit during the second quarter, netting $10.4 billion. The tech giant’s advertising revenue soared 56% compared to the same period a year earlier.
Shares have rallied more than 19% so far this year, and 46% since companies like Hershey’s and Denny’s paused ads on the platform as part of the #StopHateforProfit campaign in July 2020.
Join our Trading Community for more signals!
Looking ahead
A meaningful, long-term hit to Facebook’s stock would require a major shift in advertiser behavior, as well as some big wins from fed-up regulators.
This week is poised to get rockier for Facebook as Haugen is set to testify on Tuesday before a Senate subcommittee about Facebook and Instagram.
