Why Facebook fell nearly 11% in September

Economic concerns and mounting pressure on Facebook itself led to a sell-off.

| More on:
Woman using Facebook on her smartphone.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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

What happened

Shares of social media titan Facebook (NASDAQ: FB) fell 10.5% in September, according to data provided by S&P Global Market Intelligence. The stock kicked off October with another 5% decline in the first two trading days as pressure mounts against the company's accused use of data and control of information. A service outage in Facebook, Instagram, and WhatsApp on Monday, Oct. 4 didn't help either.

So what

While the stock market overall has been dealing with potential economic risks (higher interest rates, supply chain woes, and a possible U.S. government debt default if the debt ceiling isn't raised), Facebook's problems as of late are of an altogether different nature. The company has been dealing with a Federal Trade Commission antitrust lawsuit that seeks to retroactively unbundle Facebook's acquisitions of Instagram and WhatsApp, claiming the company has used its dominance to squash competitors.  

Additionally, a whistleblower (now revealed to be former employee Frances Haugen) who first started publishing documents taken from Facebook with The Wall Street Journal last month could add to the burden of evidence against the social media giant. The backlash against big tech's data practices isn't going away anytime soon, and it's Facebook that continues to bear the brunt of accusations.

Now what

For all of its flaws and the angst voiced against it, Facebook's popularity has been enduring. Its user base -- which numbers over 3 billion worldwide across all of its apps -- continues to grow, as does global advertising activity across its platform. Facebook is far from being unseated as the leader in social media anytime soon. 

Shares are up 25% over the last trailing-12-month stretch even after the recent tumble. Perhaps a breather was overdue, and recent news simply added fuel to the fire. While Facebook's legal woes and impact on society at large are worth keeping an eye on, it's the financial results that matter most -- and Facebook is doing more than just fine financially right now. Sales and profits keep climbing, especially as the initial effects of the pandemic from a year ago are lapped. 

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

Nicholas Rossolillo and his clients own 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.

More on International Stock News

woman delivering Amazon Prime parcel
International Stock News

Why the Amazon share price rose today

Positive inflation news bodes well for the e-commerce leader.

Read more »

man happy while driving tesla
International Stock News

Why today’s jump in Tesla shares surprised investors

Musk may be selling shares, but investors aren't reading too much into it.

Read more »

Green arrow with green stock prices symbolising a rising share price.
International Stock News

Why Bitcoin and Ethereum are rising today

New data hinted that inflation may have peaked in July.

Read more »

Purple tech growth chart
International Stock News

Nasdaq surges after inflation data: Why the top tech and growth stocks moved higher

Although inflation is still above 8%, investors are starting to come back to growth stocks. There will be a lot…

Read more »

A man wearing a blue jumper and a hat looks at his laptop with a distressed and fearful look on his face as he reads about the Core Lithium share price falling 30% in a month
International Stock News

Elon Musk just sold US$7 billion worth of Tesla shares. What’s going on?

The enigmatic CEO offloaded shares in his high-profile company. What gives?

Read more »

Downward spike graph
International Stock News

Why Bitcoin, Ethereum, and Shiba Inu are falling today

Cryptocurrencies fell along with tech stocks as investors await key inflation data.

Read more »

Man pumping petrol
International Stock News

Why the Tesla share price sank today

Several bits of news caused these EV stocks to slide today.

Read more »

Virtual goggles
International Stock News

Here are 2 safe Metaverse stocks for risk-averse investors

These tech companies could benefit in a big way from the creation of the metaverse, but they're already highly profitable…

Read more »