Shares of Facebook, Twitter and
Snapchat-owner Snap fell further on Tuesday as Wall Street fretted over
potential regulatory scrutiny that could hobble the business of the social
networks.
Facebook lost 4.75 percent after
it said it faced questions from the U.S. Federal Trade Commission about how its
users’ personal data was mined by a political consultancy hired by Donald
Trump’s campaign.
Since revelations on Saturday
that a political consulting firm had improperly obtained personal data on 50
million Facebook users, the world’s largest social media company has lost $60
billion of its stock market value.
With concerns that Facebook’s
handling of users’ data would lead to stepped up government regulation, social
media rival Twitter slumped 9.0 percent and was on track for its worst day
since July last year.
Snap fell nearly 4.0 percent to
$15.86, dipping further below the $17 price set in its public listing a year
ago.
Adding to regulatory jitters, the
Israeli newspaper Haaretz reported that Israel Justice Minister Ayelet
Shaked accused Twitter of "lack of cooperation," saying terrorist
groups were using the site and that Israel was considering a law to combat such
activity.
Longbow Asset Management Chief
Executive Jake Dollarhide said his firm’s Twitter stake was in negative
territory due to this week’s drop. He has no plan to sell because he believes
Twitter faces less regulatory risk than Facebook or Snap.
“The average guy or gal uses it
as a news feed,” Dollarhide said. “I don’t know what personal information I’ve
ever shared on Twitter.”
New European Union privacy rules
that go into effect in May will require letting European users opt out of
highly targeted online ads, or face fines of up to 4.0 percent of annual
revenues.
San Francisco-based Baker Avenue
Asset Management chief investment strategist King Lip said Facebook and other
social media companies face more regulatory risk from European governments than
in the United States.
Credit reporting agency Equifax’s
massive breach of consumers’ sensitive financial data disclosed last September
led to government probes but no major regulatory or legal changes.
“Equifax’s breach was far more
egregious than the Facebook issue, and there hasn’t been any significant
legislation,” Lip said. “I think there’s going to be a lot of chatter about
privacy issues surrounding Facebook, but I don’t think any significant legislation
is going to be passed.”