The size of last Thursday’s loss by Facebook could be overstated—but not easily. The company lost 19 percent of its market capitalization, dropping from $630 billion to $510 billion. It was the largest single-day loss for a U.S.-listed company at any time. Smaller losses continued on Friday and Monday.
What triggered the massive sell-off—the company’s report of slow revenue growth and slowest-ever user growth during the second quarter—hardly explains it. Facebook’s other high-profile problems clearly contributed to the loss: the inability of the main Facebook app to generate ad revenue, new and stringent regulations on data protection imposed by the European Union, the use of the platform by Russian-linked accounts to spread disinformation, the improper sale of personal data to third parties, and the company’s struggle to monitor accounts for racist filth and other forms of depravity. But these problems have been known for months, and in any case the company’s other apps, Instagram and WhatsApp, go from strength to strength.
Mostly overlooked in the reaction to Facebook’s sell-off was a similarly dramatic loss a day later by Twitter. The social-media company’s shares fell by 20.5 percent—a market share loss of $6.6 billion—and its monthly active user count fell by around 1 million. (The company doesn’t reveal the number of daily active users, but it’s safe to assume that number also fell precipitously.) Twitter lost another 2.2 percent on Monday.
Twitter executives contended that the loss in user numbers has mainly to do with the suspension of bogus and malicious accounts: a point, however, that only emphasizes the platform’s association with online vitriol and deceit. Twitter’s chiefs are right, however, to point out that the company has posted profits for three consecutive quarters, in this quarter reaching $711 million in sales.
Yet despite all the undoubted gains for both Facebook and Twitter, and despite a bullish market and increasingly robust economy, investors took a decidedly skeptical view of the two social media giants.
I don’t know why. Nor does anyone else. But perhaps part of the answer is that, more than any other social media platforms, Facebook and Twitter are avenues for the kind of acrimony that has embittered our politics and poisoned reasonable dialog. Instagram, Pinterest, Snapchat, WhatsApp—these and similar platforms may irritate their users for a variety of reasons, but they don’t lend themselves to rancor and rage in the way Facebook and Twitter do. I wish no ill on either company. At one time I enjoyed and benefited from a Twitter account. I expect both will regain their losses and continue to adapt and profit. (Full disclosure: THE WEEKLY STANDARD has worked with Facebook as a paid partner in the magazine’s efforts to verify the factual truth of claims made in the political sphere.)
Still, I can’t help wondering if last week’s astonishing abandonment of the social media companies by so many investors signals a wider impatience with online animosity, deception, and unreason. Leaving aside the merits or demerits of individual social media websites, any sign of movement away from the antipathy now sadly typifying our politics is an encouraging one.
