Facebook Stock Plunges On Campaign News, Dragging Wall Street With It
UPDATED to reflect closing price. Facebook stock plunged nearly 7% today, dragging all U.S. stocks lower, after news of the company’s involvement in the use of 50 million users’ personal data by 2016 election consultants.
Shares dropped $12.53 to finish at $172.56, their lowest level since last October. The social network’s slump was blamed for pulling the Nasdaq down nearly 2% for the day, while the less tech-heavy Dow 30 and S&P 500 also surrendered 1% apiece in a glum start to the week.
The Facebook selloff was prompted by uncertainty about the company after the damaging news over the weekend about its role in a consultant to the Donald Trump campaign’s illicit acquisition and manipulation of user data. A whistleblower who worked for data research firm Cambridge Analytica until 2014 told the New York Times and the UK’s Observer newspaper that data from up to 50 million Facebook accounts was taken without permission.
“We exploited Facebook to harvest millions of people’s profiles,” the whistleblower, Christopher Wylie, told the Observer. “And built models to exploit what we knew about them and target their inner demons. That was the basis that the entire company was built on.” Cambridge Analytica is backed by hedge-funder and longtime Trump supporter Robert Mercer. Steve Bannon, a key adviser to Trump until his ouster a couple of months ago, once sat on the company’s board.
In association with the Times and the Observer, a four-month undercover investigation by the UK’s Channel 4 also aired on Monday, alleging Cambridge Analytica routinely engages in entrapment and extortion on behalf of clients. The firm pushed back, saying the segment had been “edited and scripted” as a set-up, and that its conduct is well within the law.
Facebook suspended the firm last weekend for violating its terms of service, though Cambridge Analytica fired back, insisting it was in compliance and minimized its role, insisting that voters could not be swayed by targeted ads. “People are smarter than that,” the company said in a tweet.
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