Investors apparently don’t like the data privacy controversy engulfing Facebook, and that worry — along with rate hike and trade war fears — pushed the stock market sharply lower Monday.
Facebook has come under fire after a political intelligence firm accessed the profiles of more than 50 million users without their permission, an episode that raised questions over privacy and why Facebook didn’t alert users.
Investors also worry that Facebook and other social media companies could come under increased regulatory scrutiny.
The troubles for Facebook, which is one of the most popular stocks on Wall Street, spread to the broad stock market.
Facebook shares closed down $12.53, or 6.8%, to $172.56, a swoon that has wiped out roughly $30 billion of the stock’s value. It was the stock’s worst one-day plunge since March 26, 2014, when it tumbled 6.94%, according to FactSet.
Shares of the other FAANG stocks — an acronym that also includes Amazon, Apple, Netflix and Google parent Alphabet — also were down. Including Facebook, the FAANG names lost an estimated $69 billion in market value Monday.
A tech industry in the crosshairs of regulators is a negative, according to Wall Street.
“A ‘techlash’, or political backlash against the concentrated power and influence of leading U.S. technology companies, is building and gaining momentum,” says Joe Quinlan, chief market strategist at U.S. Trust. “Investors fear that more regulation and political oversight is coming to ‘Big Tech’, a prospect that could impinge on future earnings.”
Wall Street, Quinlan adds, is also worried about a related risk: “Rising digital protectionism, as more governments, like the European Union and China, clamp down on the monopolistic positions” of the big tech companies.