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U.S. stocks traded well off session highs in late-morning trade Monday, with a decline in Facebook contributing to the midday retreat. The Dow Jones Industrial Average rose 1%, but it had previously gained more than 2% on the day. The S&P 500 was up 0.6%, less than half the 2% increase it had seen earlier in the session, which had represented its biggest one-day percentage gain since November 2016. The Nasdaq Composite Index rose 0.5%. The index, which is heavily weighted toward large-capitalization technology and internet stocks, previously rose 2.1%. Facebook fell 5.6%, with losses accelerating after the Federal Trade Commission said it was investigating the company's privacy practices. The social-media giant has been under tremendous selling pressure of late, and it is down more than 20% from its recent record high, a decline that puts it into bear-market territory. Despite Facebook's weakness, the technology sector remained up 1.1% on the day, and all 11 primary S&P 500 sectors were in positive territory. The gains on the day came on signs that concerns over a potential trade war were waning.
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News of a massive data breach hit Facebook hard last week.
Shares are at their lowest since July 2017.
Baird and Co. analyst Colin Sebastian says usage metrics are down, coinciding with the breach.
Watch Facebook in rel time here.
Facebook users are becoming increasingly less enthusiastic about the platform, according to a survey conducted by Baird and Co. following the news of political research firm Cambridge Analytica's hack into 50 million user accounts.
In a note to clients sent out Monday, Baird analyst Colin Sebastian said while there is no evidence of users deleting their accounts, Facebook usage metrics are looking shaky.
"Our latest survey indicates some additional decline in usage/engagement, particularly among younger demographics, coinciding with recent headlines around data privacy," Sebastian wrote.
Baird's survey asked users which platforms they are using more or the same amount of time. Facebook was the sharpest decliner in the survey.
This visual shows how Facebook's decline in favorability.
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"In our survey, 32% of respondents indicated stable/increasing Facebook usage in 1Q18, down from 38% in 4Q17 and 43% in 1Q17)," the note said.
"Among respondents age 25-34, Instagram showed the largest sequential uptick in favorable responses (27% indicated stable/growing usage vs. 19% in 4Q17), which supports the view that younger cohorts abandoning the core Facebook app are likely shifting usage to other Facebook-owned properties," Sebastian added.
And while there is some evidence advertisers are pulling back on spending, he thinks that'll be "short lived" because of Facebook's dominant share of internet users.
"There are few channels available that can match Facebook's return on ad spend," he said.
Sebastian lowered his price target to $210 a share, citing "the potential for brands and small businesses to pause some Facebook campaigns until headlines subside."
Facebook shares are down more than 18% since news of the breach broke.
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The US Federal Trade Commission has confirmed that it is investigating Facebook over its privacy practices, following recent revelations that data firm Cambridge Analytica harvested and exploited tens of millions of users’ data without their permission. Facebook’s stock renewed its downward slide, bringing the company’s total loss of market value to around $90 billion since the scandal broke 10 days ago.
“The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices,” said Tom Pahl, acting director of the FTC’s Bureau of Consumer Protection, in a statement.
The FTC will look into whether Facebook had violated a 2011 consent decree imposed by the regulator, in which the company promised not to share user data without their consent. In 2014, an app developed by a Cambridge University professor accessed the data of up to 50 million people, which he later passed onto Cambridge Analytica, a Trump campaign consultant.
If the FTC finds Facebook at fault, each violation could cost the company $40,000. Facebook faces multiple other probes, hearings, and investigations in several countries.
Here’s the full FTC statement:
“The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers. Foremost among these tools is enforcement action against companies that fail to honor their privacy promises, including to comply with Privacy Shield, or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act. Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements. Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices.”
Read next: Facebook is being investigated by the FTC. Here’s what it will ask
U.S. regulator, state attorneys look for answers from Facebook WASHINGTON The leading U.S. consumer protection regulator and attorneys representing 37 states stepped up pressure on Facebook Inc on Monday to explain how the social network allowed data of 50 million users get into the hands of a political consultancy. |
EU presses Facebook on sharing of user data The European Commission pressed Facebook on Monday over whether EU citizens' data were among those improperly harvested by a British political consultancy, after the U.S. regulator said it was investigating the firm's privacy practices.
WRAPUP 4-U.S. regulator, state attorneys look for answers from Facebook WASHINGTON, March 26 The leading U.S. consumer protection regulator and attorneys representing 37 states stepped up pressure on Facebook Inc on Monday to explain how the social network allowed data of 50 million users get into the hands of a political consultancy.
Facebook CEO among those invited to testify at U.S. Senate hearing WASHINGTON The U.S. Senate Judiciary Committee said on Monday it had invited the chief executive officers of Facebook Inc , Alphabet Inc and Twitter Inc to testify at an April 10 hearing on data privacy.
US STOCKS-Easing trade war tensions boost Wall Street * Indexes up: Dow 1.55 pct, S&P 1.3 pct, Nasdaq 1.35 pct (Updates to early afternoon)
Facebook must face tighter rules, tougher penalties: German minister BERLIN Misuse of data by Facebook means it will in future be bound by stricter regulations and the threat of tougher penalties for further privacy violations, Germany's justice minister said on Monday.
U.S. FTC investigating Facebook's privacy practices WASHINGTON, March 26 The U.S. Federal Trade Commission said on Monday it is conducting an open investigation of Facebook Inc's privacy practices following the disclosure that 50 million users' data got into the hands of political consultancy Cambridge Analytica.
BRIEF-FTC Says It Opened Non-Public Investigation Into Privacy Practices Of Facebook * STATEMENT BY THE ACTING DIRECTOR OF FTC’S BUREAU OF CONSUMER PROTECTION REGARDING REPORTED CONCERNS ABOUT FACEBOOK PRIVACY PRACTICES
German cartel office investigates Facebook's use of data from partner websites BERLIN, March 26 Facebook's use of data it culls from partner websites is under investigation in Germany, the head of its cartel office said, as its justice minister summoned executives from the under-fire social media network to a meeting over privacy concerns.
