Facebook Stock Has Best Day in Two Years as Zuckerberg Testifies
Shares of Facebook Inc. (FB) gained on Tuesday, as CEO Mark Zuckerberg testified before U.S. lawmakers over allegations of data misuse.
Zuckerberg Gets Likes
Mark Zuckerberg apologized and defended his company on Tuesday as he appeared before a joint U.S. Senate committee hearing. “It was my mistake, and I’m sorry,” the 33-year-old CEO said when questioned about Facebook’s misuse of user data.
Lawmakers grilled Zuckerberg on issues ranging from Facebook’s Cambridge Analytica scandal to its failure in addressing provocative messages during the most recent Myanmar crisis. He took it all in stride, appearing confident and poised throughout the question-and-answer period (at least, that’s what professional PR experts quoted by Bloomberg had to say).
Zuckerberg took full responsibility not just for Cambridge Analytica, but for Facebook’s negligence in safeguarding consumer data. That said, Republican Senator from Iowa Chick Grassley sent a strong signal that new regulations are on the way.
“The status quo no longer works,” said Grassley, who chairs the Judiciary Committee. “Congress must determine if and how we need to strengthen privacy standards to ensure transparency and understanding for the billions of consumers who utilize these products.”
Wall Street Responds
The testimony resonated with Wall Street, as investors scooped up shares of the battered social media company. Facebook shares added 4.5%, their best in two years. By comparison, the S&P 500 Index gained 1.7% on Tuesday and the index’s technology component rose 2.5%.
The stock surge grew Zuckerberg’s personal fortune by $2.8 billion to $66 billion, according to Forbes. That makes him the world’s seventh richest person.
Despite the gain, FB is down almost 15% from its all-time high and its current price point lags behind the 50-day and 200-day moving averages. An RSI of 48 also signals weak underlying momentum for the social media stock.
Facebook’s Declining Usage
Facebook experienced a public backlash last month amid reports that a political research firm had scraped data on 87 million people. The revelation sparked a growing debate over Facebook’s privacy standards at a time when the company was battling a noticeable decline in usage.
The social media platform declined by roughly 50 million hours per day in the fourth quarter, or 5% overall. Meanwhile, independent research from a company named Edison found a steady drop in usage among Americans aged 12 and up.
While Zuckerberg has tried to spin the decline as a good thing, it’s apparent that the platform is experiencing fewer meaningful interactions, which partially explains recent efforts to transform the News Feed.
It remains to be seen how much damage the declines will do to top and bottom line results. Facebook is expected to report its quarterly earnings report Apr. 25. Analysts are expecting per-share earnings of $1.37 for the quarter, up from $1.04 the same time a year ago.
Featured image courtesy of Shutterstock.