Earlier this week, the New York Times came out with a bombshell story about the user data it shared with other companies. Essentially, Facebook’s plan to scale was based on having companies integrate it into their own systems–and the payoff was that these other businesses would gain access to data.
It seems that every week or so there’s a new revelation about the way the social network has bungled user trust, but this one seemed more serious. This wasn’t a one-off deal, nor was it a security breach it could cover up–this was business as usual, which used user information as its currency. And even Wall Street has swiftly responded.
Over the course of yesterday, Facebook stock dropped over 7%. Now, in pre-market trading, the stock is still continuing to sink. In total, compared to Tuesday’s close, the company lost about $29.95 billion in its market capitalization.
Facebook’s stock has been on a downward trend for months now–following revelations about how Cambridge Analytica was able to hijack the platform and extract user data. It seems with every new headline, investor trust continues to sink. This latest instance, however, caused one of the bigger drops Facebook has seen this year.
At its peak this year, Facebook’s market capitalization hit almost $630 billion. Today, it’s at $382 billion, meaning the company’s value dropped by over $248 billion in the last six months.
What will it take for its performance to improve? Perhaps something that really shows that Facebook does value user trust–beyond apologizing and promising to do better. The company sure seems like it’s at a turning point, but it’s unclear if it will be able to make the necessary changes. If not, perhaps more stock drops are on the horizon.