Markets

Why Facebook Slumped on Thursday

What happened

Facebook (NASDAQ: FB) has certainly had its glory days as a company and as a stock, but we can't count Thursday among them. The social media giant traded down for much of the day, eventually settling at a marginal decline of just under 1%. A big new company initiative is being greeted with a lot of investor shrugs.

So what

On Wednesday, CEO Mark Zuckerberg announced in -- of course -- a post on his Facebook page that the company is establishing a $1 billion fund for content creators. These grants will be provided to people who make content both for Facebook's flagship site and for its photo/video-sharing companion Instagram.

Woman making a video with a smartphone mounted on a tripod.

Image source: Getty Images.

"We want to build the best platforms for millions of creators," Zuckerberg wrote. "Investing in creators isn't new for us, but I'm excited to expand this work over time. More details soon."

True to "Zuck's" word, the tech giant followed up with some of the nitty-gritty in an official company blog post. It said that it would channel that $1 billion into seed funding for creators to make their work, bonuses (likely depending on viewership), and milestone payments for reaching certain goals.

Now what

Facebook's obvious aim is to steal the thunder away from specialty content sites like TikTok and Clubhouse, which have been hotly and durably popular in the short video and audio chat realms, respectively. Investors might feel that this is a throw-money-at-the-problem lunge at becoming more competitive in such spaces; their very tepid reaction indicates doubt that it'll be overly successful.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Eric Volkman owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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