Facebook took another blow in pre-market trade on Wednesday, with the world’s biggest social network facing a storm of criticism after claims that an analytics company garnered data on 50m users.
Shares declined 2 per cent in early New York trade to $165.23, according to FactSet data. The group, one of America’s most valuable companies and a Wall Street star over the past few years, has shed roughly $50bn in market capitalisation since the end of last week.
Cambridge Analytica, a firm used by Donald Trump’s presidential campaign, received user data collected using a Facebook app meant for academic research, according to reports from The New York Times, The Observer and Channel 4.
Mark Zuckerberg, Facebook chief executive, has faced calls from US and UK politicians to testify on the incident. The US Federal Trade Commission is also looking into whether Facebook violated the terms of a consent decree over its use of personal data, according to Bloomberg.
Wall Street analysts have offered differing views on whether the bout of controversy will have a long-term impact on the Menlo Park, California-based company.
Scott Devitt, a Stifel analyst, who in January cut his rating on the stock from “buy” to “hold” pointed out this week that the reason for the downgrade was because “we didn’t believe the company was moving fast enough to address its emerging platforms issues and that it risked losing consumer trust.”
However, Brian Nowak at Morgan Stanley is less concerned. He does not see “fundamental risks to revenue or earnings per share at this point”, according to the New York investment bank.
Growing public ire has already prompted Nordea, one of Scandanavia’s biggest bank, to announce that it would would not let its sustainable funds buy any more Facebook shares for the time being.
“Given the high-level revelations and the turmoil surrounding the company with a strong public backlash, coupled with the overhanging threat of increasing regulation of the platforms and the EU GDPR on the horizon, we choose to quarantine Facebook,” said Sasja Beslik, the bank’s head of sustainable finance, on Twitter last night.
Get alerts on Facebook Inc when a new story is published