2018 hasn’t been a particularly kind year to Mark Zuckerberg. Sure, he’s still a billionaire, so he has that going for him, but his reputation has been somewhat tarnished as a result of what has happened to Facebook over the years. Facebook has endured a number of scandals, including the Cambridge Analytica fiasco as well as the spread of misinformation on a massive scale.
Back on July 26, Facebook lost approximately $120 billion in market capitalization, which is, uh, a lot. The stock dipped 19 percent that day alone to $176.26, which literally wiped out all of the company’s 2018 gains up until that point. Its market capitalization dipped from $630 billion to $510 billion in the span of 24 hours. It marked the worst single-day market performance for Facebook since going public in 2012. Not great!
As of this writing, Facebook’s stock price has dipped a bit more down to $173.80. Zuckerberg has drawn his fair share of heat with regards to the company’s stark decline, but what does the future hold? Will Zuckerberg be forced to resign?
All odds referenced in this article are courtesy of MyBookie.ag.
Will Mark Zuckerberg Step Down as Facebook CEO Before 2019?
- Yes +400
- No -700
As you can see, oddsmakers seem to think Zuckerberg is safe in his post at least through the end of the year. You won’t find an online sportsbook out there with odds favoring Zuckerberg leaving his job any time soon. However, many believe the time for Zuckerberg to bow out has long since passed.
Zuckerberg is the founder of Facebook, so it’s obviously a more complicated matter than a standard CEO would face. Considering the vast array of public missteps we’ve seen over the last couple of years, just about any normal CEO would have been canned by now. Facebook did see a massive rise in value last year, but, as mentioned in the open, it’s come crashing back to earth since then.
Zuckerberg obviously has immense power, especially among those in Silicon Valley. Former Facebook product manager Antonio Garcia Martinez wrote a book in which he said, “Americans are born evangelical. Sometimes it’s about Jesus, and sometimes it’s about other gods. In Silicon Valley, the startup has substituted for your particular Protestant sect.” Because Zuckerberg is the founder of the biggest and most powerful social media operation on the planet, he has quite a bit of sway around there, and understandably so.
That said, just because Zuckerberg is the founder of the company doesn’t necessarily mean he’s the right man to lead it into the future. The idea that Zuckerberg should step aside is not really a novel one. People have been calling for his ouster for quite some time now. Obviously, he has ignored said calls to this point.
Facebook’s shareholders have very little power within the company. If the board of directors were to suggest Zuckerberg should leave, he could simply fire them and replace them if he wanted to do so. With all that has happened, however, Facebook has eroded its trust with the public. Running a bunch of TV ads to say they’re sorry only goes so far.
The problem with this particular bet is the timing. Something extraordinary would likely have to come down the pike in order for Zuckerberg to resign by the end of the year. New scandals pop up all the time, but it’s not necessarily predictive. Could it come out tomorrow that Zuckerberg is secretly a drug kingpin? Sure, but that’s highly doubtful.
“No” is the heavy betting favorite here at -700, and it’s clearly the right option.
Will Facebook Stock Dip Below $100 Per Share by 2019?
- Yes +400
- No -600
So, we know Facebook is clearly capable of losing an awful lot of money in an awfully short period of time. We just saw it happen a month ago. Declining revenue and user growth were cited as the primary reasons for July’s massive decline, and investors weren’t exactly thrilled when executives warned those trends were likely to continue in the same direction.
On a conference call on the day of the decline, Chief Financial Officer David Wehner said, “Our total revenue-growth rates will continue to decelerate in the second half of 2018, and we expect our revenue-growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4.” Wehner added that the company does expect expenses to grow from 50-60 percent over last year.
A large chunk of the expenses come from hiring new employees. Zuckerberg said in the past that Facebook planned to hire 20,000 people in order to handle safety and security on the site in light of the data breach and massive deluge of fake news stories that were posted leading up to the 2016 United States presidential election. Zuckerberg said, “As I’ve said on past calls, we’re investing so much in security that it will significantly impact our profitability. We’re starting to see that this quarter.”
Facebook’s stock prices peaked at nearly $220 per share the day prior to the aforementioned crash. A dip of around $50 is pretty steep, but it would take another monumental collapse for the stock price to dip to under $100 by the end of the year. Facebook’s stock price is still fairly high, and I don’t think it’s reasonable to suggest that a drop under $100 per share is a reasonable prediction, especially considering 2018 is almost over already.
Again, side with the heavily-favored “no” prop at -600.
Will Facebook Stock Dip Below $50 per Share by 2019?
- Yes +800
- No -1500
Will Facebook Stock Recover Back over $200 per Share?
- Yes -250
- No +170
This one is more interesting. As mentioned previously, it’s not like Facebook’s stock is in the tank. A price over $170 per share is still pretty significant. The precipitous drop we saw in July presented a natural buying opportunity for investors, and shortly thereafter the stock started to recover a bit.
After dipping as low as $167 per share, Facebook eventually rallied up to $183 within a week. 10 percent growth in the span of a week is certainly a big deal. This is part of why it’s easier to see Facebook’s stock ultimately bouncing all the way back than it is to suggest Facebook is in serious danger of continuing to plummet.
I think it’s reasonable to assume Facebook will continue to trend in the right direction, at least for the rest of 2018. Let’s not forget that Facebook is a massive company in control of a number of hugely popular apps. Once people dealt with the news that Facebook expected slower growth in the latter stages of the year, the stock began to bounce back.
After the scandals, Facebook decided it wanted to focus more on the stories of individual users rather than trying to act as a news outlet. The shift in focus is what led to the slower growth, but most experts seem to believe that focusing on people’s stories will eventually match if not exceed the monetization rates that were generated with the news focus.
Between Facebook itself, Instagram and WhatsApp, people are constantly engaging with Facebook. And, for better or worse, that’s not going to be changing any time soon. Facebook essentially prints money, and the value will remain in the long run.
Facebook is set to get in on the mobile dating game, and they are also planning on releasing some smart home speakers in the near future. Both endeavors should help push the company’s stock back in the right direction. Getting back over $200 per share by the end of 2018 may be a bit aggressive, but I think it’s a reasonable prognostication.
Give me “yes” here at -250.
Will Google Acquire/Merge with Facebook by 2019?
- Yes +700
- No -2000
The idea of Google possibly purchasing Facebook isn’t out of left field. Waaaaay back in 2004 when Facebook was just getting started, some Google executives approached Zuckerberg in an attempt to see if the two companies could work together, or if Google could even purchase Facebook, which was known as TheFacebook at the time.
The meeting obviously didn’t end up going anywhere. That didn’t stop Google from circling back a few years later. Google’s top ad salesman, Tim Armstrong, got the green light from the board in order to pursue a deal in which Google would serve Facebook’s international advertisements. That never came to pass, but Google did offer to invest $15 billion in Facebook at the time.
Zuckerberg still owns the majority of the shares in Facebook. Unless he plans to step down prematurely, it’s tough to imagine him selling off those shares before he retires.
It would also cost Google a fortune to purchase a company as huge as Facebook. Google is bigger than Facebook, yes. Back in May, Amazon passed Google as the second-most valuable company in the United States, trailing Apple. Google’s parent company, Alphabet, currently has a market cap a hair under $850 billion. Facebook has a market cap of about $499 billion. So, it would cost Google an absolute truckload of cash just to purchase Facebook. If you used the current market caps, Google would have to pay about 60 percent of what it is currently worth in order to purchase Facebook. Obviously, they wouldn’t do such a thing.
A merger is probably a more reasonable outcome, but it’s still not likely, either. This is the kind of thing that may eventually come down the pike, but it doesn’t appear to be on the way any time soon. Stay tuned on this moving forward, but for now this is a bet we can safely ignore. There’s zero profit potential in betting on “no” at -2000.