Shares in Facebook received some much needed reprieve on Tuesday, edging lower in pre-market trading but managing to avoid - at least for now - a repeat of the ferocious selling seen in the prior day session when nearly $37 billion (€30 billion ) was wiped off its market value.
The world’s largest social network is down 0.6 per cent ahead of the Wall St bell. The move comes after the stock suffered its worst one-day drop in five and a half years in the wake of reports that the company has allowed personal data from tens of millions of users to be harvested and used without permission.
The rumble in the company’s shares has sent ripples around global markets; Morgan Stanley describes buying the euro as “the inverse” of big tech stocks. “The US NYSE Fang Index selling off hard has increased the relative attractiveness of European share markets. A tech-focused equity sell-off should help the euro,” wrote Hans Redeker at the bank.
The New York Times and the Observer reported over the weekend that Cambridge Analytica, a data analysis firm employed by Donald Trump's presidential campaign, mined the personal data of 50m users to create profiles to target them in elections. The data, which was collected via an app on Facebook that was meant to be used solely for academic research, included information about the people who signed up to use the app and their Facebook friends.
The revelations have prompted concerns that regulators will clamp down on Big Tech, which have already been targeted by privacy advocates in the past. Shares in Alphabet, the parent of Google, Apple and Amazon all fell on Monday.
The scandal also comes as Facebook is already under fire over its role in promoting fake news during the elections.
Politicians on both sides of the Atlantic have called for Mark Zuckerberg, Facebook’s chief executive, to testify about the privacy breach, while authorities in the US, the EU and the UK have said they would investigate.
– Copyright The Financial Times Limited 2018