In today’s early trading hours, the broader market was in positive territory with minor day gains as investors remained cautious before the Fed’s interest rate decision. At 1:17 PM ET, the S&P 500 Index was up 0.8% while the NASDAQ Composite Index (VTI)(QQQ) and the Dow Jones were trading with 0.6% and 0.9% gains, respectively. Tech stocks Alphabet (GOOG), International Business Machines (IBM), and Microsoft (MSFT) were up more than 2.0%. In contrast, Facebook (FB) posted its daily low of $133.63 at around 1:10 PM ET, registering a 7% drop from its previous closing price. Let’s take a look at what could have caused this sell-off in FB today.
Key negative factors for Facebook
Earlier today, a New York Times report claimed that Facebook provided “far greater access to people’s data than it has disclosed” to many large companies, including Microsoft (MSFT), Amazon (AMZN), Netflix (NFLX), and Spotify (SPOT). The report cited internal records and interviews for its claim. It added, “The exchange was intended to benefit everyone. Pushing for explosive growth, Facebook got more users, lifting its advertising revenue. Partner companies acquired features to make their products more attractive.” The report could come as a big blow to Mark Zuckerberg’s company, which has faced several similar accusations in the recent past.
In another negative development for Facebook, “The District of Columbia’s attorney general sued Facebook Wednesday for allegedly letting outside companies, including the political consulting firm Cambridge Analytica, improperly access user data and for failing to properly disclose that fact,” Axios reported.
These reports could escalate Facebook’s legal troubles, which could continue to hurt investor sentiment and drive the stock down.
As of December 18, social media companies Facebook and Twitter (TWTR) were down 18.6% and up 40.5%, respectively.