Shares of Facebook Inc. fell more than four per cent on Friday and were on track for their worst session in more than three months after chief executive Mark Zuckerberg announced changes that he said would hit user engagement in the near term.
Zuckerberg said late on Thursday the world’s largest social network would adjust its centrepiece News Feed to prioritize what friends and family share, while reducing the amount of non-advertising content from publishers and brands.
Fears that the changes would lead people to spend less time on Facebook sent its stock down $8.44 US to $179.30 US.
If the stock closes at that level, it would be the biggest one-day decline since September and would shrink the company’s market value by $23 billion US, which is more than the total market value of rival Snap Inc., the owner of Snapchat.
“There is too much uncertainty relating to the economic impact of Facebook’s pending News Feed changes for us to be comfortable retaining a Buy rating on the stock,” wrote Stifel analyst Scott Devitt in a research note, cutting his recommendation to “hold” from “buy.”
The change announced by Zuckerberg follows criticism that Facebook’s algorithms may have prioritized misleading news and misinformation in people’s feeds, influencing the 2016 American presidential election as well as political discourse in other countries.
While, Facebook’s advertising would be unaffected by the changes, the shift would likely mean that the time people spend on Facebook and some measures of engagement would go down in the short term, the company said.
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