Please ensure Javascript is enabled for purposes of website accessibility

Why Facebook Stock Slipped Today

By Jeremy Bowman – Aug 17, 2021 at 5:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the social media titan fell along with the broader market.

What happened

Shares of Facebook (META 2.53%) slipped today along with a broader pullback in the market on a weak retail sales report. That was likely the culprit for the social media giant as the performance of its advertising business is closely tied to overall consumer spending. Also today, Facebook said it would take down Taliban or pro-Taliban content, deeming the group a terrorist organization following its takeover of Afghanistan in recent days.

Facebook stock closed the day down 2.2%, while the S&P 500 edged down 0.7% and the Nasdaq lost 0.9%.

The Facebook "like" sign at the company headquarters.

Facebook headquarters. Image source: Facebook.

So what

Overall retail sales were worse than expected in July. The Census Bureau reported that total retail sales fell 1.1% from June to July with particular weakness in autos, clothing stores, and e-commerce. The biggest takeaway from the report seems to be that the delta variant of COVID-19 has become at least a modest headwind on reopening, delaying the return to offices and possibly dissuading Americans from other activities like travel.

Meanwhile, other sectors that had surged earlier in the pandemic like autos and e-commerce, two key sources of advertising revenue for Facebook, now seem to be normalizing as the pandemic-related tailwinds that they enjoyed start to fade.

Separately, the company said it was proactively removing pro-Taliban content, though the question of what to ban on the platform and how to do it has been a thorny one in the past. The Washington Post, for instance, reported that Taliban members have used WhatsApp to send out messages to Afghan citizens, and those incidents could be an eyesore for Facebook if they continue.  

Now what

Facebook's 2% drop today isn't something that should change any investor's thesis on the stock since such swings are normal, especially given the news about retail sales and the broader market sell-off. The company is also coming off an outstanding earnings report in the second quarter, and is likely to perform well in the third quarter as it laps the period last year that included the Facebook boycott.

That event is a reminder that Facebook faces some political risk, so investors may want to pay attention to how it handles the situation in Afghanistan.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

Stocks Mentioned

Meta Platforms Stock Quote
Meta Platforms
$123.49 (2.53%) $3.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.