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Facebook, Inc. (FB) Stock Plunges On Data Misuse, Analysts Unmoved

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Facebook, Inc. (FB) Chief Executive Mark Zuckerberg has been told to testify before the Senate Judiciary Committee following the latest of a string of problems that has plagued the social media firm since the beginning of the year. Some are characterizing the misuse of Facebook, Inc. (FB) data by Cambridge Analytica as a “data breach,” although company executives deny it. Despite all the problems, some analysts seem to like Facebook, Inc. (FB) stock just as much as they have for years.

Facebook Inc (FB) data breach affects 50 million users

A whistleblower told the Observer that Cambridge Analytica, which was headed up by then-Trump advisor Steve Bannon, used the personal data of Facebook, Inc. (FB) users without their permission in 2014 to construct a profiling system for votes in the U.S. The purpose was allegedly to target users individually with political ads specifically for them. According to CNBC, Cambridge Analytica said in a statement over the weekend that it did not use the Facebook, Inc. (FB) data for Trump’s presidential election campaign.

Christopher Wylie told the British newspaper that they “exploited Facebook, Inc. (FB) to harvest millions of people’s profiles. And built models to exploit what we knew about them and their inner demons.” Facebook, Inc. (FB) confirmed documents revealed to the newspaper that it knew about the information that had been harvested but didn’t inform users and didn’t do much to secure affected users’ data, The Guardian reports. In fact, a revelation by The New York Times explains why some are characterizing the situation as a Facebook, Inc. (FB) data breach. The newspaper’s staffers were apparently still able to find the data that Cambridge Analytica is accused of harvesting online.

There was no Facebook, Inc. (FB) data breach: statement

Facebook, Inc. (FB) said in a statement that it has now suspended Strategic Communications Laboratories (SCL Group) and their data analytics firm Cambridge Analytica from its platform. The company also called the claim that what happened was a data breach “completely false.” It states that Aleksandr Kogan collected the data from users who voluntarily signed up for his app and gave consent for their data to be used. It also accused the Observer, which is among those defining the issue as a Facebook, Inc. (FB)data breach, of making “false and defamatory” allegations, reports The Guardian. The company maintains that no systems were breached, which means that the situation was not a data breach as some are stating.

The issue stems from the app thisisyourdigitallife which was designed by Kogan. His firm Global Science Research allegedly worked with Cambridge Analytica to get “hundreds of thousands of users,” according to The Guardian, to take a personality test. However, the Observer alleges that in addition to collecting the data of users who agreed to let their information be used, the app also collected data on their friends.

Call for Zuckerberg to testify

The tie between the alleged Facebook, Inc. (FB) data breach and the Trump campaign makes the matter even more concerning, as the investigation into the alleged Russian interference with the presidential election continues.

Officials in the U.S. and Europe are now investigating. CNBC reports that Minnesota Senator Amy Klobuchar is pushing for Zuckerberg to testify before the Senate Judiciary Committee. She is among those describing the situation as a Facebook, Inc. (FB) data breach, and she wants to know what they knew about the misuse of Facebook, Inc. (FB) data “to target political advertising and manipulate voters.” The Street adds that British MP Damian Collins is calling for his testimony in connection with possible manipulation over Facebook, Inc. (FB) regarding the Brexit vote in 2016.

According to CNBC, the social media firm might have broken laws in the U.K. and some U.S. states by not notifying users that their data had been collected.

Some analysts still in love with Facebook, Inc. (FB) stock

Facebook, Inc. (FB) stock plunged by more than 6% right out of the gate on Monday, but perma-bulls such as GBH Insights analyst Daniel Ives aren’t moved by this latest issue. Rather than seeing this as a Facebook, Inc. (FB) data breach, he characterizes the problem as “background noise for investors in the near-term.” He also warned that the problem could mean that more changes to the company’s business model will be implemented in the next year to 18 months.

He noted that the issue will likely “reignite the debate within the Beltway and EU around a tighter regulatory environment,” but he believes that it will end up being nothing but “headline risk” for Facebook, Inc. (FB) stock. As a result, he’s not really concerned about it causing problems for the social media firm’s “advertising fortress and key monetization for 2018 and beyond.

He believes the company will be able to “keep regulators at bay with this background noise not impacting the core business model,” although he will be watching the headlines for further impacts to Facebook, Inc. (FB) stock. He maintains his $225 price target and Highly Attractive rating for Facebook, Inc. (FB) stock and remains a buyer of the shares on weakness caused by this latest problem.

Others highlight regulatory risks for Facebook, Inc. (FB) stock

Pivotal Research analyst Brian Wieser rates Facebook, Inc. (FB) stock as a Sell, and he did raise the issue of regulatory risks, saying that they will likely intensify. Despite his bearish rating, he still doesn’t expect the firm’s fundamentals to be impacted much, as he believes advertisers will still spend more and more on the platform.

Interestingly, CNBC‘s Jim Cramer did say today that his charitable trust was among those unloading Facebook, Inc. (FB) stock, saying that the negative headlines are making investors “sick” of it. Alphabet stock may be affected by the problems plaguing Facebook, Inc. (FB) today, as it’s down more than 3%. Global Macro Investor founder Raoul Pal lumped the two digital ad firms together, tweeting that Alphabet and Facebook, Inc. (FB) stock could be approaching an important moment:


Facebook, Inc. (FB) stock tumbled by as much as 6.45% on Monday, falling as low as $173 per share to reach levels not seen since last month. The decline slashed more than $30 billion from the company’s market valuation.