Facebook stock heading toward worst month in four years as FTC opens probe into Cambridge Analytica scandal

Facebook was heading toward its worst month for stocks since May 2013 on Wednesday after an analyst report warned of a temporary pullback in advertising and the US Federal Trade Commission confirmed it is investigating the social network’s privacy practises.

The stock fell 1.4 per cent to $157.14 late on Monday in New York, bucking the broader positive direction of the markets. Earlier, the shares fell as much as 6.5 per cent, erasing about US$100 billion in market value in the past 10 days.

Colin Sebastian, an analyst at Robert W Baird&Co, wrote that the firm’s latest social media survey indicates “some moderation in Facebook usage,” and notes potential for brands and small and medium-sized businesses to “pause some Facebook campaigns until headlines subside.” 

He lowered his price target to US$210 from US$225 while saying shares remain attractive for investors with medium to long-term time horizons.

The company’s CEO, Mark Zuckerberg, is facing one of his worst crises in public confidence yet after reports that Cambridge Analytica, a firm that worked for US President Donald Trump in the 2016 election campaign, improperly obtained and retained data from 50 million Americans.