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Facebook falls

by Peter A. McKay
Sep 25 2017, 12:05am

For the last few years, Facebook has been at the forefront of a tech run that has helped tech stocks—up roughly 90 percent—trounce the performance of the overall market, which rose roughly 50 percent over the last four years.

But gravity seemed to catch up with Mark Zuckerberg’s creation in recent days.

Facebook shares tumbled more than 4 percent Monday to trade at their lowest level in more than a month late in Monday’s trading session. The tumble comes during a mushrooming of negative media reports on everything from the unsavory ad-targeting practices—a ProPublica investigation recently showed that you could build an audience for ads around odious terms such as “Jew Haters”—to the growing scandal over its sale of 2016 presidential election advertising to Russian entities.

The Washington Post reported in detail over the weekend about pleas Facebook received from the Obama administration to fix flaws in its platform that Russia apparently exploited to meddle in the 2016 presidential election. The Post’s story portrayed a long struggle for Facebook to catch up with and weed out Russian shenanigans.

The Post reported that Obama personally approached Facebook founder and chief executive Mark Zuckerberg nine days after Zuckerberg publicly said it was “crazy” that fake news stories spread on Facebook had any significant influence on the 2016 presidential race.

The company has since admitted that that a Russian troll farm spent $100,000 on political ads during the 2016 election. But a separate VICE News report also suggests that unregulated political spending is widespread on Facebook, a state of affairs that could raise the risk of new regulations being imposed.

It’s increasingly become a parlor game in the Bay Area and Wall Street alike to speculate whether Facebook and similar tech giants in their weight class will soon face increased regulation from Washington.

“The worm has turned against big tech, and it’s overdue,” wrote Scott Galloway, a New York University business professor and tech consultant, in a Friday post. “Each firm has its own links to the dark side and is about to face the same scrutiny and standards the rest of business endures.”

To top it all off, Facebook also said Friday that Zuckerberg plans to sell a large chunk of his shares in Facebook over the next 18 months to fund philanthropic initiatives. And the thought of a founder selling a large chunk of stock prompted some shareholders to join in.

Other key details to watch:

  • Despite Monday’s selloff, Facebook’s share price has still more than quadrupled since the company went public in May 2012.

  • Google and Facebook are projected to take up 63 percent of U.S. digital ad spending in 2017, according to eMarketer.
  • In late 2015, Zuckerberg and his wife Priscilla Chan pledged to give away 99 percent of their Facebook shares in their lifetime. That would total more than $71 billion based on Mark’s current fortune, according to Bloomberg.

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