Facebook’s stock has plunged 18%, wiping out nearly $80 billion from the social networking giant’s market value in the process. Zuckerberg’s net worth has fallen by about $14 billion.”CNN reports”.
The crisis began on March 16 after Facebook said it was suspending data analysis company Cambridge Analytica for allegedly harvesting data from more than 50 million Facebook users. Cambridge Analytica worked on Donald Trump’s presidential campaign.
Investors worry that Facebook, Google and Twitter could all face tougher regulations in the United States and around the world because of the Cambridge Analytica controversy.
Investors also worry that users may flee these companies because of privacy concerns. And if users flee, advertisers may eventually jump ship too.
Other social media companies, most notably YouTube owner Google and Twitter, have both nosedived as well. Shares of Google parent Alphabet (GOOGL) fell 7% since March 16 while Twitter has plunged 20%. Twitter (TWTR) was down 12% alone on Tuesday after noted short seller Citron Research has changed its tune on the company’s stock.
the scandal is likely to blow over, investors should be aware that a continued sell-off in this sector would not be surprising, and if another scandal were to hit, it just might break the tech sector’s back,” said Craig Birk, executive vice president of portfolio management at investing firm Personal Capital in a note Tuesday.