Facebook besieged by US and Europe
Governments, regulators across two continents seek answers over user data breach
NEW YORK: Facebook Inc.’s grim week is getting grimmer.
The company on Tuesday was beset on two continents by governments suddenly focused on data security and investors unliked its stock to the point that it lost $60 billion in value.
The Menlo Park, California, company, whose social network is a ubiquitous venue for social and political life, is drawing the unaccustomed unwelcome attention after the disclosure that it released the personal data of 50 million users to an analytics firm that helped elect President Donald Trump. The company, Cambridge Analytica, has been implicated in dirty tricks in elections around the globe.
Facebook has struggled to respond to the fast-moving imbroglio, and even Facebook workers have been in the dark. The company held a staff meeting Tuesday to address their questions about what Facebook knew and when. Chief executive officer Mark Zuckerberg plans to address employees on Friday at a previously scheduled all-hands meeting.
Zuckerberg and chief operating officer Sheryl Sandberg haven’t yet spoken publicly about the data leak, despite the global firestorm. When Zuckerberg addresses staff on Friday, he’s certain to face questions about the controversy.
Facebook’s stock price fell as much as 6.2% in New York before closing 2.6% lower. The stock has slumped more than 9% since Friday’s close, giving up about $50 billion in market capitalisation. That’s almost as much as the total value of Tesla Inc.
Free fall aside, Wall Street analysts remain upbeat. Buy recommendations continue to roll in and price targets reflect a potential return of 35%.
Out of the 43 analysts who recommend buying Facebook shares, not one has downgraded the stock over the crisis. However, many acknowledge that bad publicity could keep the stock under pressure.
The political consulting company whose own troubles engendered Facebook’s was also rocked Tuesday. Facebook users don’t have to look far for instructions on how to extricate themselves or their data: Across the Twitterverse and blogospheres, outraged users have said they’re deleting their accounts and how-to instructions are making the rounds. Tech sites have published guides on how to deactivate or control carefully curated social media accounts.
The brushfire comes at an inauspicious moment. Daily active user growth in the US and Canada declined from 185 million in the third quarter to 184 million in the period, the company reported last quarter. That signals the first loss on a quarterover-quarter basis in the company’s history.