Facebook, (NASDAQ: FB) share value opened below $178 on Monday as media reports over the weekend that a political consultancy that worked on Donald Trump’s campaign had illegitimate access to data on over 50 million Facebook users.
According to Reuters, Investors and analysts remain skeptical on Facebook as this leaves much fear for long term investments in the company. The European Parliament head stated on Monday that EU lawmakers shall investigate if the data misuse has taken place as well as if this violated citizens’ privacy rights.
Over the weekend, the U.S. Congress was questioning Facebook’s personal data safeguards as reported from London’s Observer and the New York Times had raised eyebrows. These news outlets had reports on Saturday that private information from over 50 million Facebook users were in possession of data analytics firm Cambridge Analytica, and the information had not been discarded despite Facebook having knowledge of this.
“We think this episode is another indication of systemic problems at Facebook,” said Brian Wieser, analyst at New York-based brokerage Pivotal Research Group. Wieser suggested that regulatory risks for Facebook would increase as use of data in advertising would have a larger risk than before.
“This episode appears likely to create another and potentially more serious public relations ‘black eye’ for the company and could lead to additional regulatory scrutiny,” said Peter Stabler, analyst at Wells Fargo.
“It’s clear with more ‘heat in the kitchen from the Beltway’ that further modest changes to their business model around advertising and news feeds/content could be in store over the next 12 to 18 months,” said Daniel Ives, research analyst at GBH Insights.