NEW YORK: Facebook Inc Chief Executive Mark Zuckerberg’s apology for mishandling user data and some limited proposals for change at the social network drew mixed responses on Thursday, while Wall Street analysts worried about costs and a loss of trust.
Another pair of major brokerages cut price targets for a stock that has shed around $50 billion in value since Monday. Shares in the company fell as much as 2.5 per cent in heavy trading.
In Washington, Zuckerberg’s media rounds did little to satisfy lawmakers in either political party who demanded this week the billionaire testify before Congress.
Facebook was expected to brief two additional congressional committees on Thursday. Executives met with staff for the House Energy and Commerce Committee on Wednesday for nearly two hours to discuss the allegations of improper use of data on 50 million users by political consultancy Cambridge Analytica.
Facebook Deputy Chief Privacy Officer Rob Sherman and other executives were unable to answer many questions at Wednesday’s meeting, according to two aides who were present.
The Facebook executives said they had written down a list of 60 questions they pledged to answer, the aides said.
Zuckerberg on Wednesday promised tougher steps to restrict developers’ access to user information, his first response to allegations that London-based Cambridge Analytica improperly accessed data to build profiles on American voters that were later used to help elect US President Donald Trump in 2016.
Wall Street analysts expressed relief that there were no signs in the chief executive’s status update or in subsequent interviews of a more fundamental shift in the company’s advertising-driven revenue model.
Some analysts, however, said it was clear the company would have to carry extra costs to shore up its reputation in the months ahead.
Stifel analyst Scott Devitt cut his price target on Facebook by $27 to $168, while BofA Merrill Lynch slashed its target by $35 to $230. The stock fell 2 percent to $166.05.
“Facebook’s current plight reminds us of eBay in 2004 an unstructured content business built on trust that lost that trust prior to implementing policies to add structure and process,” Devitt said.
“We would buy all of our Buy-rated stocks and many of our Hold-rated stocks before we would buy Facebook shares.”
Trump’s Use Of Social Media
Amid the storm, Trump took to Twitter to boast about his successful use of social media in the 2016 campaign.
“Remember when they were saying, during the campaign, that Donald Trump is giving great speeches and drawing big crowds, but he is spending much less money and not using social media as well as Crooked Hillarys large and highly sophisticated staff. Well, not saying that anymore!,” he tweeted.
Published in Dawn, March 23rd, 2018