Back to top

Image: Bigstock

Why Did Facebook (FB) Stock Tumble Again?

Read MoreHide Full Article

Shares of Facebook were down more than 6% through late afternoon trading Wednesday, outpacing broader market losses on the back of continued concerns about data privacy and regulatory pressure.

The latest drama surrounding Facebook centers on a report published by The New York Times on Tuesday afternoon. According to The Times, Facebook shared more user data with third-party companies than it has previous admitted.

The reports stem from internal documents obtained by The Times. The documents show that Facebook collaborated with more than 150 companies to gain users and help others circumvent its usual privacy rules, the story said.

Several tech juggernauts are explicitly named in The Times’ story. For example, the report claims that Amazon (AMZN - Free Report) got access to Facebook users’ names and contact information, while Microsoft’s (MSFT - Free Report) Bing search engine reportedly viewed “virtually all Facebook users' friends without consent.”

Streaming giants Spotify (SPOT - Free Report) and Netflix (NFLX - Free Report) had the ability to read Facebook users’ private messages, The Times said.

The report is careful to note that many of Facebook’s partnerships ended years ago, but the timing of the reveal is nonetheless troubling. Facebook has faced a tidal wave of criticism this year—from users, regulators, and investors alike—related to concerns about how it handles user data.

Just recently, Facebook revealed that hackers accessed contact information from nearly 30 million of its users. Back in April, the social media company announced that Cambridge Analytica, a political data analytics firm, inappropriately harvested data from almost 90 million users.

The Cambridge Analytica scandal is ratcheting back up this week as well. On Wednesday, The Washington Post reported that District of Columbia Attorney General Karl Racine filed a lawsuit against Facebook to punish the internet giant for its role in the data breach.

Facebook already paid £500,000 in fines in the U.K.—the largest fine Britain’s data regulators can impose—because of the scandal.

Through late afternoon trading, Facebook shares were down 6.3% to $134.62. The S&P 500 was down about 1.6% at the time, with investors reigniting bearish pressure on the back of the Fed’s latest policy statement.

The central bank raised interest rates for the fourth time this year and maintained its quantitative tightening program. That was interpreted as a hawkish move, even though it lowered its long-term target rate and reduced its guidance for 2019 hikes.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Published in