Why Facebook Lost $120 billion

I’m going to give you a free recommendation today. This one’s ‘on the house’. It might be the best recommendation you’ll get from anyone at Port Phillip Publishing all year.

And it stems from one of Aesop’s most well known fables, ‘The Astronomer’.

AN ASTRONOMER used to go out at night to observe the stars. One evening, as he wandered through the suburbs with his whole attention fixed on the sky, he fell accidentally into a deep well.

While he lamented and bewailed his sores and bruises, and cried loudly for help, a neighbor ran to the well, and learning what had happened said:  “Hark ye, old fellow, why, in striving to pry into what is in heaven, do you not manage to see what is on earth?’

The core message in this fable is to never look so high that you miss what’s really happening around you.

‘It is a fool’s folly to ignore the interests of the people whom they serve.’

That quote is mine. But it’s exactly the tale of one of the world’s biggest companies…Facebook.

Why Facebook’s market cap is down US$120 billion

Aesop’s fable perfectly describes the situation which Facebook [NASDAQ:FB] now finds itself in.

While they were looking to the stars, they forgot about the people that brought them to such success. With all their developments and future visions, they simply forgot that people deserve privacy.

And yesterday, that hubris came back to punch them in the face.

At the close of the markets yesterday, Facebook’s market cap was US$629.52 billion.

By the open of the market Thursday morning (US time) it was US$508.91 billion.

Now I don’t know about you, but I’ve never seen a single company lose US$120.61 billion in the blink of an eye.

Think about how much wealth just flew out the doors. That’s the equivalent of McDonalds [NYSE:MCD] being worthless in an instant.

That’s right, McDonalds! From $120 billion to $0 like a light switch turning off.

Never before has a mega-cap stock fallen in price with such viciousness.

Why did it happen? Well, the short answer is because it’s evil.

OK, that’s maybe a tad harsh. Or not. You see, Facebook lost over one million monthly users in Europe for the first time.

Europe has just put in place a new set of laws called GDPR. The full title is the General Data Protection Regulation.

In short, it means that every company in Europe (and the UK) has to get an opt-in from people to access their data. Instead of hoarding and selling user data, companies now need explicit permission.

If they don’t, it’s a big fine coming their way.

These new GDPR rules have been somewhat of a revelation. I’ve never seen my inbox so full with emails from companies begging to keep me on their lists. I even got an email from a go-kart track I visited once, three years ago telling me about GDPR and asking me to opt in.

I didn’t. So now they can’t keep my data. Hard luck there.

Facebook, just like every other company operating in Europe, needed to tighten up their data collection. However, they’ve made an absolute meal of it.

And to make matters worse, we all now know they’ve been farming user data for years.

This all became known with the Cambridge Analytica scandal. They even had Mark Zuckerberg in front of Congress.

Now at the time, I wondered whether this data scandal would really hurt Facebook. The problem is, if you’re so used to using Facebook to connect with people, it’s not so easy to wean yourself off.

If there’s no viable alternative, then you’re a little stuck. And considering Facebook also own Instagram and WhatsApp, it’s even harder to escape their data-hungry clutches.

But it seems that people are finally starting to get sick of Facebook’s wicked ways. Even if there might not be an obvious successor at this point, people are starting to switch off Facebook.

And while it’s not exactly a mass-exodus, it sure is a sign that Facebook isn’t invincible. And they’re certainly not too big to fail.

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Should you delete your Facebook account?

Of course, analysts will put a lot of this down to poor earnings. They’ll say the user numbers in Europe isn’t all that important. They’ll sight a whole bunch of reasons why Facebook is now ‘cheap’ and a ‘buy rating’.

But I’m not so sure. I think there’s a genuine tide turning here. I think we might see 2018 as a turning point when people realised they can actually switch off from the likes of Facebook and the world won’t end.

It’s actually really easy to test out this theory. And therein lies our recommendation.

One of the most liberating things you can do in our connected world is to delete your personal Facebook account.

Now, you’ll note I said personal there. That’s because plenty of people have business accounts. I understand the need for this. You want your business, your livelihood in front of as many people as you can. And for now, Facebook still has the market covered there…for now.

But my recommendation is to delete your personal Facebook account.

To do it just go to:

Settings > Your Facebook Information > Delete Your Account and Information > Delete Account.

Facebook doesn’t make it easy. They even have an option where you can ‘take a break’ from them by deactivating your account, rather than delete it. That way they get to keep all your data while you’re ‘on break’. Just in case you just might want to sneak back in.

But don’t. Just delete it. I did.

I used to be on Facebook with a personal page. Had all my friends in there, friends of friends, people I had no idea who they were. It was rubbish.

I decided one day to pull the pin. And just like that, all my Facebook friends were gone. In an instant I broke free of the evil data-shackles of Facebook.

And the funny thing is, I didn’t lose any of my friends. We still catch up, talk, and go to events together. I even still get invited to birthdays!

Facebook was, is, and still will be a cultural phenomenon… at least for a little while longer.

However, people are figuring out that protection of personal identity is far more important than an invite to a birthday party of a person you met in a bar on holiday four years ago.

If you want to know about mega-trends and huge opportunities for investment, there’s nothing bigger right now than digital identity.

This alone is going to be one of the most controversial, hard fought, valuable battles we’ll all face. And there will be investments that, I believe, will mint a fortune along the way.

These will be the new giants of industry over the next 20 years.

Everyone wants a piece of your digital identity. Corporations like Facebook and even the government want everything they can get. But there’s only one person who should own your identity…you.

You control who gets access to it. You make the decisions in how, when and where your identity can be used. You get some kind of reward from those who ask you for it.

This is what the future looks like; user-controlled identity. Your identity, online and offline, is who you are. It doesn’t belong to anyone else. And that can be valuable to you, depending on how you use it.

How to profit from your identity is something I’m trying to figure out. And there will be ways to make it happen. But until then, the first thing to set you off on profiting from your identity is to delete Facebook.

Action to take: Delete your personal Facebook account.

Until next week,

Sam Volkering,
Editor, Secret Crypto Network

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Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

If you’d like to learn about the specific investments Sam is recommending in either small-cap stocks or cryptocurrencies, take a 30-day trial of his small-cap investment advisory Australian Small-Cap Investigator here, or a 30-day trial of his industry leading cryptocurrency service, Sam Volkering’s Secret Crypto Network here.

But that’s not where Sam’s talents end. Sam specialises in finding new, cutting edge tech and translating that research into how the future will look — and where the opportunities lie. It’s his job to trawl the world to find, analyse, research and recommend investments in the world’s most revolutionary companies.

He recommends the best ones he finds in his premium investment service, Revolutionary Tech Investor. Sam goes to the lengths of the globe and works 24/7 to get these opportunities to you before the mainstream catches on. Click here to take a 30-day no-obligation trial of Revolutionary Tech Investor today.

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