The name Mark Zuckerberg has become synonymous with the world’s biggest social media platform, Facebook. With Facebook’s meteoric rise over the past decade, it’s no surprise that Mark Zuckerberg’s success as CEO has earned him a net worth estimated at a staggering $54 billion.
But after a rocky few months in the stock market, Mark had to contend with major losses. The Cambridge Analytica scandal and US government scrutiny of tech giants respectively cost Facebook a huge amount of investor confidence, marking the beginning of Facebook’s dramatic stock tumble.
Experts have estimated that the social network’s founder lost an eye-popping $15.2 billion in July 2018 alone due to the sharp drop in stock prices for Facebook. This would mean that Zuckerberg lost around 27.4% of his net worth in that time period, making it the worst yearly loss he has suffered since Facebook’s initial public offering in 2012.
Despite this astronomical loss, Zuckerberg remained uncharacteristically quiet about the stock crisis, even as the headlines warned of Facebook’s plunge. On the contrary, he used the maelstrom to focus on improving the platform and reiterated his aim of helping “the world come closer together”.
Although there have been much finger-pointing over the debacle, it appears clear that the mounting data privacy concerns stemming from the Cambridge Analytica scandal was the main trigger behind the stock collapse. This lack of trust caused investors to lose hope in the social media giant and the Kool-Aid they had been drinking for several years.
Unsurprisingly, Facebook’s subsequently shuffled its senior management team in order to make up for the trust deficit. This included the restructuring of company structure into three divisions with distinct heads for each of them. Along with this, Zuckerberg also outlined plans for a “Supreme Court-like process” to review content moderation standards, beefed up data protection measures, and established an independent organization to review the company’s community standards.
These attempts to restore confidence in the brand amid the Cambridge Analytica debacle seem to have done the trick, as Facebook’s stock regained some of the lost ground in the subsequent months. However, this recovery is not likely to erase Mark Zuckerberg’s mammoth losses anytime soon. Nevertheless, the tech magnate paid no mind to the stock tumble and continues his pursuit for growth in the social media sector.
Data Privacy Concerns
The biggest factor responsible for the rippling effects in the stock market was the data privacy scandal surrounding Cambridge Analytica. In what was easily the biggest fiasco in Facebook’s history, the political consulting firm was discovered to have been harvesting personal information from millions of Facebook users for political profiling.
The “breach of trust” created by Cambridge Analytica prompted a public outcry over data privacy that continues to this day. This has compelled not only the US government but leaders across the world to impose strong regulations on how corporations use personal data. The European Union’s stringent GDPR law is a prime example of this, designed to make data processors more accountable for the security of user data.
The Cambridge Analytica scandal, as it appears, will go down as a major milestone in Facebook’s history. As a result, Facebook is now under more pressure than ever to implement better data protection measures and make sure users’ data is secure. This has prompted Facebook to speed up its progress in tackling data privacy issues and roll out additional safeguards and measures to protect user data from any potential intruders or breaches.
The scrutiny of Facebook’s data handling practices has also left investors rattled, pushing the company’s stock to the brink and causing Zuckerberg himself to lose billions of dollars.
Facebook’s Efforts for Damage Control
Facebook responded to the crisis by making efforts to improve its image and regain investor confidence. It engaged in talks with various governments and released statements of reform, acknowledging the severity of the situation and vowing to take appropriate actions to prevent similar occurrences in the future.
The company also reported massive spending on security, privacy, and content moderation. Facebook announced plans to hire 20,000 people in order to enhance the safety of the platform and stem misuse of user data. This included the formation of an “Oversight Board” to extend its content moderation capabilities.
These efforts were made to quell the uproar and restore trust in the name of Facebook, but the lasting impression of the Cambridge Analytica scandal was still brought down on Zuckerberg’s net worth. Moreover, the steep drop in Facebook’s stock prices ushered in a new era of caution in the world of social media, in which firms now prioritize safety and security over user growth.
However, the desire for social media growth remains the ultimate focus for Zuckerberg, as he demonstrated when he declared that Facebook should “move faster and accelerate our progress” in the wake of this massive loss. Nevertheless, the stock tumble has made him more vigilant going into 2019, and Facebook is monitoring its data privacy stances more closely than ever.
Facebook’s Rebound
Fortunately, Facebook seems to have recovered nearly all of its losses in the past few months. In January 2019, the company’s share price closed at $181.41, an increase of more than 25%. This was bolstered by a strong earnings report, mobile revenue growth and the existence of strong data privacy policies.
The newfound stability of the stock market gave Zuckerberg some respite, and signalled a great start to the year for Facebook. This was aided by the consistent rollout of new features and products, as well as the company’s investments in artificial intelligence and augmented reality. Facebook’s foray into voice-based communication through its Messenger app and the launch of the Libra cryptocurrency could also have an immense impact on the share prices going forward.
Nevertheless, the successful rebound of Facebook’s financial stock was due in large part to waning criticism from the US government and a growing realization that it was meeting its responsibilities when it came to data protection. The lawsuit threats from the FTC have dissipated, and the company is no longer in the line of fire for its data handling practices.
This fact, combined with Zuckerberg’s “growth at any cost” mentality, likely motivated him to put the Cambridge Analytica scandal behind him and focus on the future of Facebook. The stock rebounds have certainly been sweet for Zuckerberg, but the founder is still not out of the woods yet.
Conclusion
It goes without saying that Zuckerberg has suffered tremendous losses this year. The Cambridge Analytica scandal not only cost him billions but also tarnished the reputation of the company he founded. Nevertheless, Facebook’s rebound in the stock market indicates that the social platform is making progress in terms of data protection, and investors are no longer challenging Facebook’s strategies.
As Zuckerberg continues to push the boundaries of innovation and break into newer markets such as cryptocurrency and virtual reality, its clear that the tech magnate looks to the future with a forward-thinking approach despite the losses he has suffered in the past year. Despite the at times tumultuous journey, it appears that Facebook and its enigmatic founder are on their way back to regaining the trust of investors and scaling new heights in the years to come.
