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Facebook shares down 7% after reports of data misuse

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Claims Facebook misused user data has the social media network on track for its biggest one-day market capitalisation loss on record and is leading a $100 billion-plus wipeout on Monday among so-called FAAMNG stocks.

Down 7.1 per cent at $172.02 during lunchtime trade in New York, Facebook had shed $38.8 billion, cutting its market cap down to $503 billion. The stock had been down as much as 8.1 per cent.

The move looks likely to surpass its previous biggest market cap drop of $26 billion during the market sell-off earlier this year, although this was from a comparatively smaller percentage decline.

But among peers, Facebook’s loss on Monday is shaping up as one for the record books.

In a Financial Times analysis of the top three market cap drops since 1990 for FAAMNG stocks – that is, Facebook, Apple, Amazon, Microsoft, Netflix and Google (now Alphabet) – Facebook’s loss today would rank among the ten largest.

Only Apple, Amazon and Microsoft have been around since before the new millennium, and it is Microsoft’s market cap losses during the dotcom bust that still dwarf those of the names assembled here.

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But particularly for Apple and Amazon, which are now much bigger than they were in the late 1990s and early 2000s, even a relatively moderate drop can wipe off billions in market cap.

All up, the six FAAMNG stocks have today shed a combined $118.4 billionn in market cap, according to FT calculations of Bloomberg data.

The tech-heavy Nasdaq Composite was down 2.2 per cent for its second-biggest one-day sell-off this year, while the broader S&P 500 was down 1.5 per cent.

Facebook shares drop was due to the backlash intensifying over claims that it was used to harvest the data of millions of US voters.

EU lawmakers said on Monday that they would investigate reports that Cambridge Analytica, a data analysis firm, mined the personal data of 50m users to create profiles that it could use to target them in elections. The reports in The New York Times, The Observer and the UK’s Channel 4 news say the company broke Facebook’s rules by using data collected solely for research.

The UK’s data protection authority and the Massachusetts attorney-general have already opened investigations into the issue while the UK ‘s Electoral Commission is examining it.

“Allegations of misuse of Facebook user data are an unacceptable violation of our citizens’ privacy rights,” said Antonio Tajani, president of the European Parliament. “The European Parliament will investigate fully, calling digital platforms to account.”

A spokesperson for Theresa May, the UK prime minister, said the allegations against Facebook and Cambridge Analytica were “clearly very concerning”.

“It is absolutely right that the Information Commissioner is investigating this matter. We expect Facebook, Cambridge Analytica and all the organisations involved to co-operate fully.”

– Copyright The Financial Times Limited 2018/Reuters

x-ref to markets report

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