Back to top

Image: Bigstock

Why Facebook (FB) Stock Jumped Monday

Read MoreHide Full Article

Shares of Facebook surged Monday to close regular trading hours up 1.5% despite news that the social media giant is being sued for its treatment of content moderators who review some of the most horrific and "depraved images" posted on Facebook. This means that investors are excited about Facebook’s latest advertising announcement and its new hire to help its expansion in India.

Lawsuit

Big companies are sued a lot. But the lawsuit filed against Facebook on September 21 could end up sparking a larger public debate about some of the company’s practices and the amount of violent and scary content posted on its platform every day. The lawsuit claims that Facebook’s content moderators are “suffering from psychological trauma and post-traumatic stress disorder and are not being properly protected by the social media giant,” according to a press release from Burns Charest LLP.

Facebook’s moderators reportedly have to watch and flag "videos, images and livestreamed broadcasts of child sexual abuse, rape, torture, bestiality, beheadings, suicide, and murder." The social media giant currently works with roughly 7,500 content moderators around the world after Mark Zuckerberg vowed in May 2017 to ramp up its content oversight team. “It is well-documented that repeated exposure to such images can have a profoundly negative effect on the viewer," Korey Nelson of Burns Charest LLP said a statement.

“Facebook is ignoring its duty to provide a safe workplace and instead creating a revolving door of contractors who are irreparably traumatized by what they witnessed on the job."

 

 

The law firm hopes to gain class-action status for the lawsuit. And before investors simply write off this lawsuit as a joke it is worth reading many of the detailed accounts—such as The Wall Street Journal’s “The Worst Job in Technology: Staring at Human Depravity to Keep It Off Facebook” published in December 2017—that have been written about the content Facebook’s contract employees have to look through.

Video Ad Push

Now let’s move onto some of the positive news that helped Facebook shares climb Monday. Facebook announced that it will launch its Ad Breaks in 21 new countries in an effort to ramp up monetization across Facebook Watch. The social media company said Ad Breaks will now be available in five new languages: French, German, Portuguese, Spanish, and Thai.

Facebook added a slew of new European countries, including France and Germany, along with Latin and South American nations. The firm launched in August its new video ad services to content creators in the U.S., UK, Ireland, Australia, and New Zealand.

Ad breaks allow users that meet specific Facebook monetization eligibility standards to place mid-roll and pre-roll advertisements in their video content. Facebook also lets publishers and content creators add image ads directly below videos. “We are also introducing the ability for Pages to bulk upload large numbers of videos so they can easily build up their Facebook video presence and earn money for their qualifying back catalogue,” Facebook Director of Product, News Feed and Media Monetization Maria Smith wrote in a blog post on Monday.

The expansion of ad breaks comes as Facebook dives deeper into video in order to better compete with Alphabet’s (GOOGL - Free Report) YouTube and other platforms. Last week, eMarketer released a report that said Amazon (AMZN - Free Report) is set to become the third largest digital advertiser in the U.S. behind only Google and Facebook. Meanwhile, Facebook has actively added more live video content in order to compete against Twitter and other firms in the age of Netflix (NFLX - Free Report) .

India

In other positive news, Facebook hired Ajit Mohan to run its operations in India as the social media company expands in one of the world’s largest countries. Mohan previously ran Indian video streaming service Hotstar, a streaming platform owned by Twenty-First Century Fox's (FOXA - Free Report) Star India. “India is one of the largest and most strategically important countries for Facebook," Facebook's Vice-President of Business and Marketing Partnerships, David Fischer, said in a statement.

“Ajit's depth of experience will help us to continue to have a positive impact in India across communities, organizations, businesses and with policy makers.”

Facebook’s new hire comes as the company tries to push further into live sports. This includes the rights to stream La Liga—Spanish soccer's top division—games in India and other South Asian countries over the next three seasons. Facebook hopes the deal that began this season helps attract viewers and advertisers in the country that has become its largest market, with 270 million users. In total, the social media giant boasts 348 million users in the Indian subcontinent.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Amazon.com, Inc. (AMZN) - free report >>

Netflix, Inc. (NFLX) - free report >>

Fox Corporation (FOXA) - free report >>

Alphabet Inc. (GOOGL) - free report >>