Facebook Volatility Shakes Investors

Wayne Ellis

[Wall St. Sign]

Facebook Volatility Shakes Investors (Reuters)

With advertising revenue up 66 percent, you’d think Facebook (FB) shareholders would be on top of the world. You’d be wrong. Although the social media giant posted remarkable Q3 gains, its share price went yo-yo yesterday, rising 15 percent before suddenly falling to a loss of 3 percent, then ending the day slightly higher.  What caused the up and down momentum? The reasons was news that the company wouldn’t be increasing the frequency of its newsfeed ads to increase revenue going forward — now shown at the rate of 1 every 20 newsfeed stories. This situation, combined with the rumor that FB is falling out of favor with younger users, caused the share price to drop. Looking ahead then, the social media giant did report that it would increase advertising rates, but will that be enough to sustain growth? That’s the question in front of investors this morning.

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