Shares of a personal data broker plunge as Facebook cuts ties

Key Points
  • Shares of third-party data provider Acxiom plunged after Facebook announced it was ending that arm of its business.
  • Acxiom lowered its guidance by $25 million as a result.
  • Facebook's announcement was part of an effort to clean up its data collection practices after news that millions of user profiles were harvested by an outside agency.
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Shares of Acxiom fell by 19 percent Thursday after Facebook ended its partnership with the data broker as result of the social media's data privacy scandal.

As a result, Acxiom warned 2019 revenue could be hit by as much as $25 million.

Facebook announced plans Wednesday to shut down its third-party data provider division as part of a wider effort to clean up data practices following a massive leak of user profiles. More than 50 million Facebook profiles were harvested by an app for data, which passed the information onto London-based elections consultancy Cambridge Analytica.

"While this is common industry practice, we believe this step, winding down over the next six months, will help improve people's privacy on Facebook," the social media giant said in a statement Wednesday.

In announcement after the end of the trading day, Facebook said it informed Acxiom that the Facebook Partner Categories will be discontinued over the next several months. While Acxiom's guidance for this year won't change, the Arkansas-based company lowered its 2019 fiscal guidance and said total revenue and profitability could take as much as a $25 million hit.

Acxiom provides data for "people-based" marketing, according to its website. The stock was down 19 percent as of 2:30 p.m. New York time.

The allegations about Cambridge Analytica have drawn concern concern over whether Facebook data were used to influence the outcome of the 2016 U.S. presidential election and the Brexit vote.

Shares of Facebook have also taken a hit since the news came out, and were down 13 percent for the month as of early Thursday. Dring the regular trading session, they moved 3.5 percent higher.

Facebook CEO Mark Zuckerberg posted an explanation online last week.

"We have a responsibility to protect your data, and if we can't then we don't deserve to serve you," Zuckerberg said on his Facebook page.

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