Why Facebook slumped on Thursday

$1 billion initiatives aren't as impressive as they used to be, it seems.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Facebook (NASDAQ: FB) has certainly had its glory days as a company and as a stock, but we can't count Thursday among them. The social media giant traded down for much of the day, eventually settling at a marginal decline of just under 1%. A big new company initiative is being greeted with a lot of investor shrugs.

So what

On Wednesday, CEO Mark Zuckerberg announced in -- of course -- a post on his Facebook page that the company is establishing a $1 billion fund for content creators. These grants will be provided to people who make content both for Facebook's flagship site and for its photo/video-sharing companion Instagram. "We want to build the best platforms for millions of creators," Zuckerberg wrote. "Investing in creators isn't new for us, but I'm excited to expand this work over time. More details soon." True to "Zuck's" word, the tech giant followed up with some of the nitty-gritty in an official company blog post. It said that it would channel that $1 billion into seed funding for creators to make their work, bonuses (likely depending on viewership), and milestone payments for reaching certain goals.

Now what

Facebook's obvious aim is to steal the thunder away from specialty content sites like TikTok and Clubhouse, which have been hotly and durably popular in the short video and audio chat realms, respectively. Investors might feel that this is a throw-money-at-the-problem lunge at becoming more competitive in such spaces; their very tepid reaction indicates doubt that it'll be overly successful.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Eric Volkman owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Facebook. The Motley Fool Australia has recommended Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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