This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Tuesday, October 26, 2021

Facebook and Netflix defy controversy, and send investors a signal

For reasons various and sundry, large technology companies are under fire from both within and outside their walls.

And for reasons various and sundry, investors keep telling us they’re not nearly as worked up as the general public over the hydra-headed controversies menacing key cohorts of the FAANG gang (Facebook, Apple, Amazon, Netflix, Google).

The latest to defy the doom and gloom was Facebook (FB). In spite of weeks of sinister, accusatory headlines that targeted the platform’s involvement in everything from sending teenage girls into emotional spiral to fanning the flames of the January 6 riot that paralyzed the nation’s capital, Face book managed to mostly defy Wall Street’s expectations with its third quarter earnings.

After a brief dip, the stock took off in after-hours trading, and is inching closer toward its record high above $384.

In fact, Facebook’s results arrived on the same day as Tesla’s (TSLA) muscling its way into the $1 trillion market capitalization club, and a week after Netflix blew away estimates with its results. Both the electric carmaker and the streaming behemoth have found themselves in the crosshairs of external critics and employees alike, albeit for different reasons.

Given that Tesla and Netflix both spiked to fresh highs, and Facebook’s stock is closer to its 52-week high than its comparable low, it’s striking that investors keep sending the same consistent message in the face of multiple scandals: We do not care.

Earlier this month, I made the point that Facebook should be judged on the utility of the services it provides for the users still willing to log in, even as controversies threaten to engulf the company.

And by all indications, the numbers of people willing to keep up with family, friends and endure the flood of political rants (and yes, some misinformation) remains formidable. As of Q3, Facebook’s daily active users were close to 2 billion, while monthly active users neared 3 billion.

With all the criticism, people would be forgiven for unplugging from Facebook en masse — but they clearly aren't. Not bad for an algorithm that’s routinely accused of being the soul-sucking, real life incarnation of Skynet or The Matrix.

To be sure, Facebook has to weather a political firestorm — and a regulatory crackdown that may severely sanction or, in the worst case scenario, force a breakup of the platform.