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Facebook changes News Feed, investors click on 'sad'


By and David Ingram

(Reuters) - of Inc fell more than 4 percent on Friday and were on track for their worst session in more than three months after announced changes that he said would hit user engagement in the near term.

Zuckerberg said late on Thursday the world's largest would adjust its centrepiece Feed to prioritise what friends and family share, while reducing the amount of from publishers and brands.

A warning by Zuckerberg that people could spend less time on in the short term as a result of the changes sent the company's stock $8.29 lower to $179.47.

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, which is more than the total market value of rival

N>, the owner of Snapchat.

"There is too much uncertainty relating to the economic impact of Facebook's pending Feed changes for us to be comfortable retaining a Buy rating on the stock," wrote in a research note, cutting his recommendation to "hold" from "buy."

The change announced by Zuckerberg follows criticism that Facebook's algorithms may have prioritised misleading and misinformation in people's feeds, influencing the 2016 American as well as political discourse in other countries.

said its new ranking system would hurt from publishers and brands, like 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 no choice but to spend more on advertising, and as a result prices will climb, predicted Eric Schiffer, of Reputation Management Consultants, which advises corporate brands on

"They're definitely going to be required to buy an ad," Schiffer said.


With its stock up 48 percent over the past 12 months, has been a of a that has propelled the to record highs. Its revenue is expected by analysts on average to have surged 45 percent in 2017, a rare accomplishment for a company of its size.

Some hedge funds used Friday's drop in Facebook's stock to bolster their positions, said Joel Kulina, a at

"Guys were hoping there would be more of a pullback so they could buy more," Kulina said. "They don't think there are any real cracks in the story."

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

John Ridding, the of the Financial Times, warned on Friday that the domination of revenue by search and platforms was putting pressure on

"The FT welcomes moves to recognise and support trusted and reliable and analysis. But a to the challenges of the new information ecosystem requires further measures," he said.

(Reporting by and in San Francisco, additional reporting by in Bengaluru; editing by and Marguerita Choy)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, January 13 2018. 01:56 IST