Facebook Shares Are Falling: Apple Is to Blame
The latest quarterly report confirmed strong dependence of Facebook on ads. According to it, 98.3% of the company’s April-June, 2021 revenue is made on ads. Hence, any changes in this sector make the shares of Mark Zuckerberg’s company fall.
At the end of July, when Facebook was reporting the results of the previous quarter, they carefully voiced certain worries that in the second half o the year, the financial performance of the company might worsen. The quotations of Facebook (NASDAQ: FB) headed down at once, dropping by 4% to $358.32 by the end of the session.
At that time already, some mentioned the Apple tech giant as the one to blame for the events. Let’s try to find out how come that the company from Cupertino influences the business of the world’s most famous social network and its stock price.
What did Facebook warn its investors of?
On September 22nd, Facebook confirmed its forecast for the second half of the year and added that the decline would be even larger in scale than expected. In the nearest future, financial results of each quarter will be getting worse after Apple imposed some grave restrictions on the use of its clients’ personal data.
On the same day in NASDAQ, Facebook shares closed with a 3.99% decline. The stock price reached $343.21, which is the July low. Over the trading session of September 22nd, the low was $340.69.
What are the restrictions about?
Other companies could provide users with more precise, personalized, and urgent ads thanks to this bulk of data. In other words, those were perfect conditions for high convergence and, hence, a high income.
Is it, indeed, about privacy?
Apple acts as if it were selflessly protecting privacy of its clients; in Facebook, they are sure, however, that it’s all about money, as always. The Financial Times assesses the market of online ads as $350 billion a year. Apple is attacking rivals by the new restrictions that used to monetize users’ data.
Now the social network will not be able to sell ads at its usual prices because they’ll be hard to call targeted. Apple, in turn, is in a very comfortable position that resembles a monopoly.