While networks effects can have both positive and negative effects on value, all the recent senior management departures suggests the effects are tilting toward the negative. The departures include Chief Product Officer Chris Cox, WhatsApp co-founder Jan Koum, Instagram co-founders Kevin Systrom and Mike Krieger, Chief Security Officer Alex Stamos and Chief Communications Officer Rachel Whetstone.
Martin said she believes Facebook is capable of keeping the network effect from swinging to negative, but winning that fight becomes less likely if it must contend with regulatory and headline risk distractions on top of management turnover.
Facebooks stock has run up 11.4% over the past three months but has shed 13.5% over the past 12 months, the only FAANG stock to have lost ground over the past year.