Facebook shares are in the process of a healthy recovery after the losses caused by the Cambridge Analytica scandal: more than half of those losses have been recouped thanks to record profits and the signs indicate we over time the events of recent weeks will be seen as a blip.
Why haven’t Facebook’s profits been affected by its problems? Any other company faced with the loss of a million users in its main market and many others reducing use the social network to talk to friends would find itself in the woods with the bears closing in. But not Facebook: most investors understand Facebook has problems and are concerned, but still see the company as very valuable.
Its founder passed with flying colors his appearance before the United States Senate Committee on Commerce, Science and Transport: the most that came out of that appearance was that the United States may, in a calm and considered way, think about introducing some kind of legislation along the lines of the EU’s General Data Protection Regulation (GDPR). The UK’s threat to force Mark Zuckerberg to appear before Parliament if he sets foot in the country could be a minor PR issue, but if he agreed, he wouldn’t face any tougher questions than he did in the US Senate, and once again, the prospect of a grilling by MPs doesn’t seem to have affected the company’s share price much.
#DeleteFacebook? Sure, knock yourself out: the company doesn’t seem to be having too many problems with this, perhaps because Facebook really is too big to fail. It has created a highly profitable ecosystem and although it will have to “fix” a few things here and there, its share price keeps on going up, as true a sign of the times we live as any. Asked which of the big four tech companies they would give up first, polls seem to suggest people would leave Facebook before Apple, Google or Amazon, and many have their doubts about the company’s ethics. But none of this has affected its share price. Facebook’s ecosystem is in permanent transformation, its problems fixed as they surface, a huge sociological experiment that vast numbers of people want to be part of.
Let’s face it, Facebook is back… if it ever went away. There are no signs, as yet, of any lasting damage from the Cambridge Analytica scandal, however tempting it might be to extrapolate. As things stand, and on the available evidence, Facebook is going to be with us for a good while longer…
Enrique Dans is Professor of Innovation at IE Business School
Source by:- forbesShare: