Facebook Inc (FB) stock was on track for its worst day in more than a year right out of the gate on Friday following comments from company management about some changes they will be making to the News Feed. The Facebook News Feed changes involve shifting the focus from sponsored content to a focus on “meaningful posts” from users’ friends and family members.
Facebook Inc (FB) News Feed changes will change content prioritization
News Feed chief Adam Mosseri made the announcement about the changes in a release posted in the Facebook Inc (FB) newsroom. He also included a lengthy post from CEO Mark Zuckerberg, who said the changes are aimed at “making sure the time we all spend on Facebook Inc (FB) is time well spent.”
Mosseri said that the Facebook Inc (FB) News Feed changes will be rolled out over the next few months and will include updates to the rankings for how content is prioritized within each user’s feed. He said the updates will provide users “more opportunities to interact with the people they care about,” adding that they’ve been receiving feedback that content posted by media outlets, businesses and major brands has been “crowding out the personal moments that lead us to connect more with each other.”
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Mosseri explained that the Facebook Inc (FB) News Feed changes will center on changes to how posts are prioritized. In addition to using “likes” and other reactions, comments, and shares, the platform will also “prioritize posts that spark conversations and meaningful interactions between people.” The new algorithms will use predictive analytics to try to guest which posts users would be most likely to engage with their friends about.
Here’s why Facebook stock is tumbling
Facebook Inc (FB) stock tumbled on Friday because Zuckerberg said he expects the Facebook Inc (FB) News Feed changes to result in a decline in the amount of engagement and time spent on the social network. However, Zuckerberg also said he expects the time that is spent on the social network to become “more valuable.”
“And if we do the right thing, I believe that will be good for our community and our business over the long term too,” he wrote.
Stifel analyst Scott Devitt even downgraded Facebook Inc (FB) stock to Hold due to the News Feed changes. He said in a note to investors that he sees “too much uncertainty related to the economic impact” of those changes for him to be comfortable retaining his Buy rating on Facebook Inc (FB) stock. He added that the company’s “response to address its platform run counter to its ability to monetize.”
Will the fake news problem get worse?
Mosseri explained that space is limited in News Feeds, which means less public content will be shown. Page administrators could see their reach, video watch times and referral traffic decline, with the extent of the declines varying from Page to Page. He added that Pages which create posts people generally don’t engage with will likely see the largest declines.
One potential problem I think could result from these Facebook Inc (FB) News Feed changes is wider proliferation of fake news, a problem social media firms have been battling more and more over the last year. Fake news could attract even higher levels of engagement than real news, whether it’s because people are so outraged, or it’s due to people calling the posts out for simply being fake. Only time will tell whether this concern will play out.
The irony of these Facebook Inc (FB) News Feed changes
Ironically, Zuckerberg also referenced research that has shown how “strengthening our relationships improves our well-being and happiness.”
“The research shows that when we use social media to connect with people we care about, it can be good for our well-being,” he wrote.
The reason this is ironic is because of how many studies have shown that using social media more is correlated with less satisfaction in life. It’s unclear what study he might me talking about here because it seems that there are many more studies implicating social media use in worsening depression.
Of particular interest is this 2017 study published by Harvard Business Review, which indicated that using social media resulted in more self-comparisons with users’ friends, which then detracted from study participants’ sense of emotional well-being. This study is hardly the only one implicating social media use for seeming to contribute or worsen depression, but it’s an interesting example of just how ironic Zuckerberg’s statement might seem to some. This is particularly true given the full wording of his post about the Facebook Inc (FB) News Feed changes, which you can read here.
Facebook Inc (FB) stock tumbled by more than 4% to as low as $177.40 in intraday trading on Friday, reaching its lowest level since late December.