Reading Comprehension Challenge - Panic over Facebook's stock

The following passage is about the goofy panic over Facebook’s stock.

Read the passage carefully and answer the questions given below.

Imagine running a business that generated $13.2bn in revenue in one quarter - a 42% increase over the same quarter a year before. And, imagine that it reported a 31% jump in profits over the same quarter last year. Now watch as many allegedly smart people dump your stock because they think the future of your company looks bleak. We live in stupid times. Only dupes pay attention to one-day moves in any stock or even whole sectors. I can guarantee you no one inside Facebook is panicking. No one on its board of directors is worried or is demanding a shift in the course or Mark Zuckerberg's resignation. If anything, institutional investors are getting ready to buy Facebook at a bargain.

The story of Facebook's second-quarter earnings report and subsequent shave of 19% of its market capitalization (that's more than $100bn off the books) on Thursday tells us more about financial markets than it does about Facebook. I would caution everyone who is giggling with glee (if one is a critic like me) or shuddering in horror (if one is an investor) at the Facebook stock plunge. Look at the long curves of usage, revenue, profit, and market capitalization. Ask yourself if Facebook advertisers are fleeing. Look at global growth, not just growth in North America and Europe. Consider Instagram usage and revenue. Consider that Facebook seems poised to sell advertisements on WhatsApp. And consider the scale of Facebook - the scale. It's all about the scale.

Facebook usage growth has stalled this year in North America and Western Europe. But those markets replication or other unauthorized use of this material is prohibited by the copyright laws of India are fairly saturated and have been for several years. In addition, as younger people join Instagram and use WhatsApp instead of Facebook (which they would find more useful later in life) they still grant Facebook Inc records of user data and the valuable attention that Facebook uses to sell and target advertisements.

The bigger story of scale is that, as of February, 2.2 billion people regularly use Facebook around the world. That number could reach 2.4 billion by the end of the year. That number is so large it's hard to ponder. Is there anything besides the atmosphere and the oceans that influence 2.2 billion lives? Nothing human-made comes close.

While revenue and user growth in the wealthier parts of the world are unlikely to grow as they have for the past decade, Facebook will enjoy more than it needs from places that are growing themselves: Brazil, India, Indonesia, the Philippines, Pakistan, Nigeria, Mexico, South Africa, and other countries that are rapidly deploying mobile data services - often with Facebook's help. They have room to grow both as markets and pools of users.

India hosts 250 million Facebook users. That's only a quarter of the population of India. That's Facebook's largest user market. Only 220 million people use Facebook in the next country on the list - the United States. So not only is India the future of Facebook - it's the present of Facebook.

Facebook has contributed to much damage around the world. Much of the world has finally become aware of the ways that Facebook hurts us as a species, limiting our ability to think and live well together. I wish that were the reason for Facebook's stock dip this week. It is not. Facebook officials announced months ago that it would install changes that would intentionally slow user growth and revenue. Many of these changes are efforts to confront the pollution and distraction that harm Facebook users. For some reason, financial analysts failed to take Facebook seriously. Once investors clear their heads, the stock will rise again right along with revenue and profits. Facebook is too big to fail, just as it's too big to govern.

The moral of this story is that we can't depend on market forces to rein in Facebook's destructive power. Investors won't save us. Facebook itself won't save us. Only a global political movement aimed at breaking up that company and limiting what it can do with our behavioral data can curb Facebook. Don't let a one-day drop as part of a remarkable six-year surge in stock value distract you from that difficult truth.

(Source: The Guardian)

Q.1. Which of the following is a suitable title for the given passage?

(a) Facebook: The recent growths

(b) Crisis of Facebook - An evaluation

(c) India - Facebook's Ultimate Hope of Salvation

(d) Panic and Facebook - An unfounded epidemic

Q.2. Which of the following is a factor behind the bleak predictions about Facebook's future?

(a) Facebook's width is not counted.

(b) People ignore Facebook's profit.

(c) People do not look beyond Facebook's growth in Western nations.

(d) People are only focused on short term achievements.

Q.3. Through the statement - 'Now watch as many allegedly smart people dump your stock because they think the future of your company looks bleak.' - The author is criticizing:

(a) The outside influence that can tarnish business ventures.

(b) The importance of time.

(c) Short-sighted approach.

(d) The 'grass is always greener on the other side' kind of mentality.

Answers & Explanations:

1. (b); The entire argument of the passage is based on the panic caused by people dumping Facebook's stocks. However, it's not about Facebook and its relationship with the concept of panic. Option (d) is vague. Option (c) is too narrow to capture the main idea of the passage. Option (a) is beyond the scope of the passage. Option (b) is the correct choice as it matches the tone of the author.

2. (c); In the passage, it is stated that 'Look at global growth, not just growth in North America and Europe'. This makes option (c) the best choice. The other options are not factually supported by the passage. Hence, can be eliminated.

3. (c); The line has to be looked within the context of what came before and after it. The author charts out how Facebook has been enjoying unprecedented growth. The lines which follow the above-quoted sentence are, 'We live in stupid times. Only dupes pay attention to one-day moves in any stock or even whole sectors.' This hints at short term vision or approach. So, option (c) is the correct choice. The author is not criticizing anyone for being envious. So, option (d) is incorrect. Option (b) does not specify the context. Option (a) is vague.

Important Vocabulary:

(i) Allege (verb) - Claim or assert that someone has done something illegal or wrong, typically without proof

Synonyms: Charge, Cite, Adduce, Depose

Antonyms: Deny, Take, Withdraw, Dissent

Sentence Examples:

• The Germans allege that they captured it after strenuous fighting.
• She alleged that she had been assaulted

(ii) Glee (noun) - Great delight, especially from one's own good fortune or another's a misfortune

Synonyms: Delight, Elation, Joy, Pleasure

Antonyms: Depression, Pain, Sorrow, Trouble

Sentence Examples:

• The old lady turned back into the house, and her face was alive with glee.
• At the gate of Elm Cottage, the dog came up to him, barking with glee.

(iii) Plunge (verb) - Fall suddenly and uncontrollably

Synonyms: Dive, Fall, Jump, Spree

Antonyms: Rise, Ascent, Increase, Enhance

Sentence Examples:

• A car swerved to avoid a bus and plunged into a ravine.
• My departure terrified him, and the wind caused him to plunge from right to left.

(iv) Ponder (verb) - Think about (something) carefully, especially before making a decision or reaching a conclusion

Synonyms: Consider, Evaluate, Examine, Think

Antonyms: Discard, Forget, Ignore, Agree

Sentence Examples:

• Let them ponder on the probability of succeeding with the people.
• As I eat my breakfast and smoke my pipe, I ponder over my task.