written by reader Breakup of FaceBook

By analogg, May 9, 2019

There appears to be a growing chorus calling for the breakup of FaceBook. How would such a breakup likely affect FB’s stock price?

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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Travis Johnson, Stock Gumshoe
May 10, 2019 9:33 am

It would be crushed, most likely, since that would presumably mean separating out their fastest-growing business (Instagram) from their core platform… though Instagram might well be more valuable away from facebook than within it.

I’d expect heavy regulation will be much more likely than a breakup, though, since “monopoly” would be pretty tough to argue in court… and regulation could hurt margins, perhaps, but it would also probably benefit facebook in that it would protect them from competition (they have a lot more cash than anyone else, and heavy regulation would help to deter the “next facebook” from emerging from a dorm room somewhere).

And in truth, I would not be all that surprised if even the “regulate facebook” bluster turns out to be mostly talk and committee hearings, with no real changes to their business mode.

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