26th July, 2018 witnessed largest one-day loss scored by any company in US stock market. Facebook’s capitalization plummeted by 19% worth about $119 Billion in one day after disastrous quarterly reports were published. No company in the history of US stock market has ever lost in tune of $ 100 Billion in a single day. Question was asked in the finance circle, if this is a temporary setback or beginning of downfall of the Giant Social Network company.
Facebook has been facing challenges over its own existence on the points –
Data security of the users
Addiction of the new generation and getting hooked to social media
Fake news and misinformation
Hate posts and extremist posts
Investors were unnerved by the result showing that the users of Facebook will grow with lesser speed than expected. The main reason for slowing the growth could be theft of personal data and stricter norms on security of the personal data imposed by many countries post the news of data leak
In the past, we have seen loss of value of a brand in many cases. For example, Maggi suffered a setback when the lead content in the noodles was questioned. Or, Cadbury suffered a loss of brand value when some chocolates were found contaminated. These were serious issues for the people. There was a material defect here. Something that could harm you or your kid’s health. Though, both the brands have regained the position by making the improvements in the product and reaching market with a new branding campaign. Question is, if Facebook can survive this scare of data theft and regain the loss
It is learnt that Facebook is going to hire 10,000 new people on the staff to work on the security features of the Facebook. This cost will be increased in spite of posting the loss in stocks.
I feel, certain brands like Cadbury, Maggi could regain the loss as it was materialistic issue. They showed a corrective measure, reached the consumers with right message and regained the position. But, people are more concerned about their privacy.
In my opinion, it will be very tough for the Facebook to regain the position unless they come with a viable solution for the security of personal data of the users.