Breaking: Bad Day for Facebook as $50 Billion Share Evaporates

Business March 30, 2018

Recently, the social media behemoth, Facebook, got into the spotlight of the Federal Trade Commission, the US Parliament and UK Congress, on its involvement with a data collector company, Cambridge Analytica, when about 50 million users of Facebook had their personal information hacked into without their knowledge or consent. Apart from the infringement, the data-oriented company was also suspected to have conspired with president Trump during 2016 elections.

FTC also said that if its investigations proved that Facebook is guilty of breaking the principles of the 2011 permission decree, then it would be forced to pay fines worth millions of dollars for damages. Once the news broke last week, Facebook started to lose big chunks of shares with a 6.9% drop on the 19th of March, as many shareholders began to pull out their partnerships. The depreciation, unfortunately, has continued this week.

Investors are pulling out to save their integrity and investments, after the Facebook and Cambridge Analytica saga

More losses to come

It’s been almost 48 hours since the uninterrupted downward slide of stocks at the social media giant began. On Tuesday, Facebook lost 5% in shares, and that was adjudged to be the most unproductive day in the company in the last few years. Only this week, losses of over $50 billion were experienced in the values of its market.

The major cause for this unfortunate turn of event has been traced to the actions of stakeholders who felt betrayed by Facebook. They became hostile to the company after the news revealed that Cambridge Analytica collaborated with Facebook to unlawfully take the personal data belonging to 50 million members on the platform, all in a bid to attract supporters for Donald Trump’s election propaganda in 2016.

Worst still, the impact of Facebook’s losses did not stay within its corridors alone, it has extended to other wider sectors such as tech, which is also going down with it, as well as some social network platforms. Twitter took the lead on the losers table with 9% loss; Snap Inc. followed suit with 4% reduction. Also, S&P 500 gingerly accepted the least loss with 2% scrap of its value on Tuesday.

Mark Zuckerberg’s owned Facebook is now among the most inestimable companies in America’s economy, proudly backed up with the whopping capital that’s worth about half a trillion dollars. Facebook has gone through a bad week, the current value in the market which it lost recently worth $50 billion is bigger in size when compared with what other big players such as Delta, eBay and Ford put together, possess as market values.

Meanwhile, Senate committees in America and the UK have been summoning Facebook’s owner and chief executive officer to come forward for his own testimony concerning his role in the endangered data and the company’s regulations meant to give its community optimum privacy.

A Facebook user checking her timeline for updates and news

Analysts’ time to speak

Since the close of the market last Friday, the CEO, Mark Zuckerberg has witnessed a wipe off of around $7 billion in valuables. Nevertheless, he can still boast $70 billion worth of shares from the platform, and he doesn’t have any apparent threat to his position in the company since he’s in charge of the largest portion of the votes from stakeholders on Facebook.

One analyst from Macquarie Capital, Benjamin Schachter, explained in his research letter that the frequent publication of unfriendly news headlines and potential stringent policies are responsible for the shareholders’ hostile withdrawals of every asset they have on Facebook.

Mark Zuckerberg in 2016 while on a visit to Nairobi, Kenya

The most lucrative and money-spinning mechanism for Facebook is the sales of advertisements to users on the social media network. However, Facebook’s name and business could fall into danger if the members of the community log out because they may be afraid to lose their privacy, or maybe firms and advertising agents delay their expenses on the platform.

Another analyst from Morgan Stanley, Brian Nowak, also noted that a fragile member or the development of advertisements are types of resources whose stocks don’t always survive.

The two analysts, however, think that Mark can only do the company big favor by suppressing his pride and by heeding the Senate’s call and return the trust which shareholders had in him.

Nowak believes that Facebook will show more self-assurance and be more confident when facing its latest mistakes and that it’s time for it to decide on the best methods to use in resolving these shortcomings.