A lot has been happening at the Facebook Inc. (FB - Free Report) headquarters over the last week. The social media giant is leaving no stone unturned to salvage its fast-eroding image, the latest being a public apology issued by the company’s CEO Mark Zuckerberg via a full-page newspaper ad in major U.S. and U.K. papers on Sunday.
The apology comes four days after Zuckerberg, on Mar 21, for the first time spoke after the alleged data misuse scandal that rocked the social media platform and compromised the personal data of more than 50 million users. However, by that time, the company had already lost $60 billion, with its shares witnessing its sharpest fall in four years.
Undoubtedly, the latest apology, where Zuckerberg talks about “breach of trust” and “promises to meet,” is a last-ditch effort to save his company from further losing its already-tainted image. But will that be enough for Zuckerberg and his company, with tech stocks from the S&P 500 declining 2.7% on Friday and the markets taking a hit?
Zuckerberg’s Apology a Bit Too Late
On Sunday, Zuckerberg decided to go the most traditional way to apologize for the Cambridge Analytica fiasco. Facebook took out full-page ads in three U.S. newspapers — The New York Times, Washington Post and Wall Street Journal — and seven newspapers in the U.K., signed by Zuckerberg himself.
The apology read, “We have a responsibility to protect your information. If we can’t, we don’t deserve it.” It then explained how the entire event was a “breach of trust” with “promises to do better” and thanking users “for believing in this community.”
Facebook has struggled to cope with this crisis and the apology comes almost a week after the data breach scandal came to light. Although Zuckerberg published his first official response through a post last week, acknowledging the company’s shortcomings and its plan of action to prevent any such repetition, he certainly did not sound apologetic. Moreover, the post came four days after the fiasco and by then Facebook had already lost enough followers and a staggering $60 billion.
Facebook’s shares tanked 6.8% on Mar 19, its worst decline in four years and the third-worst weekly fall. And over the week, the social media giant’s shares plunged 14%. The week saw the entire technology sector suffering with fears of a regulatory clampdown on major tech giants, which instigated panic among investors.
FAANG Stocks Take a Hit
The Facebook data scandal had an immediate effect on the tech sector, which has been driving the market this year, nosedived on fears of a regulatory crackdown not only on Facebook but also on other big players. FAANG stocks, comprising Facebook, Amazon.com, Inc. (AMZN - Free Report) , Apple, Inc. (AAPL - Free Report) , Netflix, Inc. (NFLX - Free Report) and Alphabet Inc. (GOOGL - Free Report) , suffered through the week. While Amazon and Google declined 3.4% and 5.6%, respectively. Apple and Netflix shares fell a respective 5.8% and 4.6%. By Friday, the NYSE FANG+Index had declined 10% from the all-time high reached this year, thus entering correction territory.
Moreover, the Technology Select Sector SPDR (XLK) declined 2.7% on Friday. Tech companies came down in one fell swoop after Senator Dianne Feinstein, the top Democrat on the Senate Judiciary Committee, on Mar 20, called on Chairman Chuck Grassley to hold a hearing on Cambridge Analytica. Naturally, tech companies feared being summoned for congregational hearings by the senate.
Elon Musk Deletes Facebook Page
A day after the Cambridge Analytica scandal saw Facebook losing millions of dollars, WhatsApp co-founder Brian Acton through a tweet requested his followers to delete Facebook. “It is time,” he tweeted with a hashtag #deletefacebook. Although it still isn’t clear what Acton’s intentions were behind this tweet given that he has invested $50 billion in another social media platform Signal, the his tweet immediately started trending, with thousands deleting their Facebook page.
And that is not all. One of the biggest names to jump the #deletefacebook bandwagon was Tesla, Inc.’s (TSLA - Free Report) billionaire co-founder Elon Musk, who decided to delete the Facebook Pages of both Tesla and Space. The Tesla and Space pages had more than 2.4 million and 2.6 million likes, respectively. Musk tweeted: “"It's not a political statement and I didn't do this because someone dared me to do it. Just don't like Facebook.”
With the constant backlash from all corners and tech stocks continuing to plunge, it is too early to predict if Facebook will manage to regain it lost image. Naturally, Zuckerberg wants to save Facebook from further loss of image and salvage old pride. His way of cutting out a sorry figure for Facebook is a clear indication of this. However, it will take a lot more for Zuckerberg to win back lost territory, as perhaps he is already a bit too late in responding.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions. New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>