Social media platforms can be a very profitable investment in the short term, but will changes in the way the site operates hurt returns for investors? In the ever changing world of the Internet, particularly social media platforms, investors should pay attention to how changes in the platform can effect their wallets.
One very recent example is the new changes that were rolled out by Facebook. These changes will cause users to see more content from their friends on the site, but less content from media outlets and businesses in their feed. The reasoning behind the renovation was that studies showed people feel happier when seeing content from family and friends than when exposed to other types of content.
Facebook’s stand of prioritizing users over profits has made Facebook investors nervous. According to an article by Fortune, the stock for Facebook has dropped by 4.5% in light of the new changes to the site’s algorithms. Other social media platforms have also disappointed investors. One example is Snap, which is struggling at the moment as users are flocking away from it in favor of other platforms to share pictures and videos with friends.
As social media platforms continue to change their algorithms to enhance user experiences, investors need to be aware how these changes may affect their returns. In the case of Facebook, the changes have not gone over well with all users. According to Business Insider, Facebook reported a 5% drop in daily usage of the platform. This drop occurring at the same time as the release of the new algorithms may be coincidental, but the combination of these two factors may have advertisers starting to look to spend their money elsewhere. That prospect does not bode well for the company’s stockholders.
While investors can reap big rewards from social media platform holdings, the rapidly evolving nature of the Internet and technology can make this investment very risky in the long run. For those who have stocks in websites such as Facebook and Twitter, keeping your portfolio balanced with minimal risk investments will keep your money safe should the changes in a platform suddenly cause it to go bust.