A new study just revealed that even as Facebook stock hit an all-time-high of $131 per share after reporting huge earnings this week, users are rapidly losing enthusiasm.
Facebook announced on July 27 that the company earned 97 cents per share on revenues of $6.44 billion for the second fiscal quarter ending in June. That was substantially higher than the Wall Street’s average analyst forecast of just 82 cents on $6.02 billion in revenue.
Having closed in trading at an all-time-high of $121.92, the stock went ballistic to $131 per in after-hours trading. But on the morning of July 28, Facebook stock fell back to $124.
While traders were celebrating earnings doubling over the last 6 months, the American Consumer Satisfaction Index, which polls customer satisfaction for almost 100 industries and more than 1,000 companies, found that Facebook’s “benchmark” score versus other social media companies plunged by an industry high 9.3 points and is now at about the level the company saw in 2011 as social media was just taking off.
Facebook went from receiving the highest ACSI rating in each of the prior 5 years to a low middle score. ACSI scores are closely watched by advertisers to understand if their messages are getting through to potential customers. The benchmark score fell for every social media company, except for Google and their YouTube site.
Small local companies seem to have been the biggest sources of new revenue for Facebook in the quarter, but its engagement factor with millennials shriveled as Snapchat is seen by youth as much more “legit.”
When Bloomberg TV recently asked a teenager about her opinion of Facebook, she seemed confused, then answered that she did not use Facebook and had no account. But she added: “my parents use it.”
Facebook CEO Mark Zuckerberg told investors on the company’s earnings conference call, “We’re … improving the experience for our community by helping them build more relevant and engaging ads.”
But ASCI Chairman Claes Fornell commented, “Consumers have not fully accepted advertising as a necessary cost for online services they have come to expect as free. There is little companies can do to change that perception beyond making sure that those advertisements are relevant and non-disruptive.”
Facebook my be suffering blowback from the Gizmodo blog’s exposure of Facebook’s exclusion of conservative and Christian stories in its “trending news.” Under the façade of supposedly “curating” trending stories to help its users, former Facebook employees claim any “thought” that was not sufficiently liberal and consistent with Mark Zuckerberg’s pro-globalization and pro-immigration attitudes were spiked.
Facebook has denied there was ever any systemic bias, but said they would retrain employees working on the section. Unfortunately for the Facebook brand, even minor tweaks to its social platform’s algorithm are now met with intense viral anger by users suspicious that they are being “parented” by Mark Zuckerman.