Facebook: The future of the social network is determined in Asia

E Twa 123 billion dollars in two hours. Never before in the history of Internet companies has a company lost as much of its market value as Facebook has since announced. The stock price fell by more than 15% at the close of the market. When even David Wehner, Facebook's chief financial officer, openly answered critical questions from badysts, investors punished Wehner's clear announcements by a panicky flight: Facebook's share price plummeted from 217 to around 179 dollars, losing ground Thursday

. ] But what investors panicked exactly like that? Facebook narrowly missed the high expectations of badysts, highlighting figures for which all other companies would have been celebrated. The quarterly business figure grew 42% to $ 13.23 billion ($ 11.31 billion) year on year thanks to the boom in advertising online. Earnings rose 31% to $ 5.1 billion. The number of users has increased over the year from more than 200 million to 2.23 billion.

This was not the retrospective, but the outlook for the future that frightened investors. Facebook is undergoing fundamental structural reform and is subject to political and regulatory pressures. After the social network made the headlines the year following the 2016 US elections as a multiplier of false news, racism and extremism, the boss and founder Mark Zuckerberg complimented and announced the change radical.

Difficulty starting with "stories"

The news thread should no longer be the place where users spend most of their time. Instead, users of the "Stories" feature summarize their experiences in everyday life with collages of images, video clips, text modules and short stories. No cat videos or sinister reports should promote user engagement, but have lived together daily adventures. "Stories" are not only in Facebook, but also in WhatsApp and Instagram function that should divert the attention of the news feed with its problems.

The catch: Facebook can not say exactly if its clbadic ad formats in the mini-stories of users work as well as in the wire of # 39; news. "We really do not know if this can be monetized as well as the news feed," said Facebook general manager Sheryl Sandberg during the conference call. The consequence of the reorganization: sales growth will slow significantly in the second half and will likely fall to less than 30%, according to CFO Wehner.

Facebook's biggest problem is that users in major US and European markets are not as active to use as once. In the United States, the number of daily active users stagnates to 185 million. In Europe, the number has even slightly decreased, to stand at 279 million.

Young users withdraw

First, in Europe, Facebook had its first impact in the last quarter as Facebook will be regulated more strictly. "Since the entry into force of the new EU General Data Protection Regulation, users are much more aware of the amount of data collected and used by Facebook," says rights expert Rolf Schwartmann. media and data protection at TH Cologne. "This awareness comes with a different usage behavior – users spend less on themselves, less often on the platform."

Second, user behavior changes because Facebook is no longer as popular. In particular, young users are withdrawing from the network, say media researchers: "Zuckerberg may wish users to reveal more private stories, but most of the younger ones are using Facebook for completely different reasons," comments Wolfgang Schweiger, researcher in media and online communication at the University of Hohenheim. "For her, Facebook has become the news media and information channel. However, this means that they visit Facebook less frequently – the news is less relevant than the personal exchange. "

Facebook has lost its role of private contact network in the young target group, so Schweiger." There is a retreat in the private – the exchange between friends is done on WhatsApp, the self-portrait The two networks are also part of Zuckerberg's group, however, Facebook can advertise there less often than in the current Facebook application.

Growth does not solve the problems. problems

Why the withdrawal of users in the two largest markets, the United States and Europe, is a source of panic among investors.The quarter is just under $ 26 in the United States , just under $ 9 in Europe and $ 2.62 in Asia There, however, in Indonesia, the Philippines and India, Facebook currently has the most new users.

Figures show that Facebook must win ten new users in Asia for every American user who says goodbye to Facebook to compensate for the loss of income. The pressure of politics and society is creating problems that Facebook can not simply offset by stronger growth elsewhere in the world.

The prospects of Wehner's financial director are therefore only realistic – and investors must get used to the fact that Facebook can only grow as fast as the turnover, as the pure growth of users suggests. However, investors do not have to worry about this: "A few years ago, Facebook's competitors were using temporary weaknesses to attract users," says media researcher Schweiger. "But for now, there are no serious competitors, which is why Facebook has time to adapt."