Facebook Inc.'s shares continued to plummet March 26 after the U.S. Federal Trade Commission confirmed it is investigating the company's data privacy practices.
At its lowest point of the trading day so far, just before 11:30 a.m. ET, the stock was down over 19% since March 16, the day that Facebook revealed it had suspended the accounts of British company Strategic Communication Laboratories and its political data analytics firm Cambridge Analytica LLC, as well as Christopher Wylie of Eunoia Technologies, for violating the platform's personal data policies. The company said it learned that data voluntarily provided to a personality test app by University of Cambridge Professor Aleksandr Kogan had been improperly passed on to third parties including Cambridge Analytica, a firm that does work for political, government and military clients. A growing chorus of regulators and lawmakers from around the globe have been calling for investigations into Facebook's data practices ever since.
"The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook," said Tom Pahl, the acting director of the FTC's Bureau of Consumer Protection, in a March 26 statement. "Today, the FTC is confirming that it has an open non-public investigation into these practices."
The FTC investigation is expected to focus on whether Facebook violated the terms of a 2011 consent decree over its handling of personal user data shared with Cambridge Analytica. In order to end an earlier investigation into Facebook's privacy protections on the site, Facebook at the time agreed to obtain consent from users before collecting their personal information and sharing it with others.
The stock was down about 3% for the day as of midday March 26, trading at $154.48.
Facebook CEO Mark Zuckerberg wrote in a March 21 post on the social network that Facebook had made mistakes regarding user privacy and outlined various steps Facebook plans to take to restore users' trust. These include more transparency about which apps have access to individual users' data and more limitations on how much data is accessible to app developers from the start.
Following news of the data scandal, several analysts said the incident created "headline risk" but predicted it would have limited impact on Facebook's near-term ad revenue. Pivotal Research Group analyst Brian Wieser said he saw the episode as further evidence "of systemic problems at Facebook" that ultimately increase the risks of regulation. He maintained a "Sell" rating on the stock with a $152 price target.