Time to unfriend Facebook? Shares in the social network are under pressure in pre-market trading on Tuesday after the company confirmed the departure of the co-founders of its popular Instagram app.
The stock fell as much as 3.2 per cent ahead of the bell before trimming those losses to 2.2 per cent.
Instagram chief executive Kevin Systrom and chief technical officer Mike Krieger said late Monday that they would leave the hugely popular photo-sharing app, which was acquired by Facebook for $1bn six years ago.
The sudden exit is widely seen as a blow for Facebook, which has seen the departure of a number senior executives in recent months following a long-running controversy over fake news and data privacy.
It also comes as Facebook has become more reliant on Instagram for user and revenue growth.
The app has more than 1bn monthly active users and will generate about $7.5bn of sales for Facebook this year, according to JPMorgan analyst Doug Anmuth.
“We believe Instagram has been a strong growth driver for FB and has played a critical role in retaining younger users within the group of FB platforms and in competing w/Snap,” he said in a note to clients on Tuesday.
Given Instagram’s importance and success, Mr Anmuth said he believes Facebook shares will “come under meaningful pressure” in the near term as a result of the departures.
Facebook shares are down 24 per cent from their July record high of $218.62.
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