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Changes to Facebook’s News Feed may have an impact on major suppliers of news and other content.
Changes to Facebook’s News Feed may have an impact on major suppliers of news and other content.

Facebook Changes News Feed, Investors Click on 'Sad'

Facebook Changes News Feed, Investors Click on 'Sad'

Shares of Facebook Inc fell more than 4% 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 centerpiece News Feed to prioritize what friends and family share, while reducing the amount of non-advertising content from publishers and brands, Reuters reported.
A warning by Zuckerberg that people could spend less time on Facebook in the short term as a result of the changes sent the company’s stock $8.29 lower to $179.47.
It was the biggest one-day decline since September and would shrink the company’s market value by $23 billion, 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.
Facebook said its new ranking system would hurt non-advertising content from publishers and brands, like news stories and viral video posts, but not change the ranking of advertising that has been paid for.
That will leave businesses that want publicity on Facebook no choice but to spend more on advertising, and as a result prices will climb, predicted Eric Schiffer, chairman of Reputation Management Consultants, which advises corporate brands on social media. “They are definitely going to be required to buy an ad,” Schiffer said.
With its stock up 48% over the past 12 months, Facebook has been a major driver of a technology rally that has propelled the S&P 500 to record highs. Its revenue is expected by analysts on average to have surged 45% in 2017, a rare accomplishment for a company of its size.
Changes to Facebook’s News Feed may have an impact on major suppliers of news and other content. John Ridding, the chief executive of the Financial Times, warned on Friday that the domination of online advertising revenue by search and social media platforms was putting pressure on media firms.
 “The FT welcomes moves to recognize and support trusted and reliable news and analysis. But a sustainable solution to the challenges of the new information ecosystem requires further measures,” he said.

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