£42bn backlash hits social media
Facebook slumps after data scandal Snapchat and Twitter lose £2bn Sell-off strikes UK cyber firm too
Investors dumped £11bn of social media stocks last night after regulators around the world probed a massive data scandal at Facebook.
shares in Facebook, twitter and snapchat owner snap all fell heavily amid calls for tighter regulation on the industry on both sides of the Atlantic, bringing their total losses over two days to more than £42bn since the scandal began.
Facebook has lost 10pc of its value so far this week – costing founder and chief executive Mark Zuckerberg £5bn. And as fears of a wider malaise in tech stocks grew, American software giant oracle was also on the slide, diving 9pc, after it posted disappointing results.
British tech stocks have also been under pressure, with Micro Focus falling another 2pc, or 19.6p, to 991.4p after a bleak update sent its shares down 46pc on Monday. And cyber-security group sophos fell 9.2pc, or 42.4p, to 416.6p, taking two-day losses to more than 16pc, as traders flagged worries over its debts.
experts view tech stocks as vulnerable to a change in sentiment, since many have soared in the past five years.
Chris Beauchamp, chief market analyst at trading firm IG, said: ‘the ripples on the pond continue to make themselves felt, especially in a market where sentiment is so vulnerable to further knocks.’
Facebook shares fell another 2.6pc to $168.15 last night following Monday’s 6.8pc slump. After the market closed shares were trading down further.
twitter was down 10.4pc to $31.35 while snap fell 2.6pc to $16. But the heavy falls were largely limited to those exposed to using customers’ data. Apple and Google owner Alphabet fell a small amount but Amazon rose 2.7pc.
the sell-off came amid mounting anger over how the details of 50m Facebook users were mined by political consulting firm Cambridge Analytica to influence voters during Us elections.
the Federal trade Commission, the powerful Us regulator tasked with protecting American consumers, has launched an investigation into Facebook’s use of personal data. Politicians in the UK and europe have also summoned Zuckerberg, 33, to give evidence to their respective parliaments over the data leak. An increasingly vocal base of ‘socially responsible’ investors have already started to sour on Facebook. ‘We do have some concerns,’ said ron Bates, a fund manager on the 1919 socially responsive Balanced Fund, which owns Facebook stock.