Facebook’s Stocks Plummeted Down to $50 Billion
Aside from having billions of users worldwide, Facebook enjoys tremendous support from businessmen using the platform to promote their products and services through ads. Most importantly, investors all over the world reap the benefits of high profit due to the social media’s popularity.
However, it seems Facebook didn’t start this week with a bang because its securities’ worth tumbled down to $50 Billion. Let’s discover the reason behind the company’s diminishing performance in the latest stock market results.
Facebook’s Cambridge Analytica Exposé
Many financial experts suspect that the downward trend started after the issue of Cambridge Analytica exploded. According to a source, CA bought millions of American data to influence the Presidential elections in 2016.
According to Cambridge Analytica, they harvested around 50 million Facebook user’s information without their consent. They contacted a psychology professor at the university named Aleksandr Kogan to buy the data from him. Aleksandr owned the company named Global Science which claimed they only collect data for academic purposes. Facebook allowed the professor to harvest the data and sensitive information of its users who downloaded his app. Unbeknownst to the users, they also gave the Kogan app a permission to take the data on all its Facebook Friends as well!
This created a spiderweb network of information breach! What’s worse, the company used Facebook data to influence the 2016 election results. The customers worldwide noted how Cambridge Analytica established close ties with President Trump. They suspected that maybe Trump cheated during the last election to win against Hillary Clinton.
Both Companies Released Statements Denying the Allegations
Both Cambridge Analytica and Facebook released statements simultaneously to deny the claims directed towards them. The former company denied the explosive media reports stating that in 2016, they received Facebook data but from another firm named GSR. They believed that the data obtained in legal faith to supply for their political analysis report. However, CA broke its contract with GSR automatically when they discovered that GSR didn’t adhere to data protection regulations. Therefore, it didn’t take part nor manipulated President Trump’s campaign.
Facebook’s CEO Mark Zuckerberg released a statement on his website denying any allegations. They reiterated that the data the CA received consents from users for collection purposes. It means the owner’s account agreed to the terms and services stated explicitly. They also said that no data breach happened. No passwords were stolen nor sensitive information hacked. Facebook remains a safe place for people to connect online.
The Controversy Affected Facebook’s Stock Index
Despite the reassurance Facebook gave, most users still doubt their statements. In fact, the customer’s hesitation reflected the plummeting performance of Facebook in the second day in a row. Just yesterday, Facebook’s shares fell another 5%. The said percentage cost Zuckerberg to lose more than $50 billion profit for this week. The CEO holds around 400 million shares of Facebook and they have already lost a total of $70 billion since last Friday.
Not only that, but it also affected the credibility and performance of other social media companies as well. S&P’s stock index fell down by 2% while Twitter tumbled down to 9%. This means social media users and investors are on the verge of losing their confidence in these types of companies.
Business Analysts Expect Facebook to Retaliate
Business analyst Benjamin Schachter stated that Facebook can still recover from the loss. However, Mark and his team should revise their business model to keep lawmakers from exploiting the platform for their political propaganda.
The company needs to strengthen their security features and moderate each action to ensure data breach won’t happen again and that it conforms to the community’s standards. These mistakes and actions can help the company in fixing their flaws to restore their investors and user’s confidence.
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