Tech

Here are the scandals and other incidents that have sent Facebook's share price tanking in 2018

Key Points
  • Facebook shares ended Tuesday at $132.43, down nearly 40 percent from its peak in July.
  • The company's share price finished at $131.55 on Monday, its lowest closing price in nearly 22 months.
  • Facebook's struggles come after a turbulent year that's been filled with scandals.
Facebook CEO Mark Zuckerberg
Marlene Awaad | Bloomberg | Getty Images

Facebook shares finished Tuesday at $132.43, up slightly from $131.55 on Monday, the company's lowest closing share price in nearly 22 months.

The decline comes after yet another major scandal for Facebook in what has been a tumultuous year for the company. After peaking in July, shares of the tech company are down almost 40 percent.

Facebook shares are getting crushed — Here’s what three experts say investors should know
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Three experts on Facebook shares getting crushed

Here's a list of the numerous mistakes, scandals and other events in 2018 that have pummeled Facebook's stock price into its current spiral.

News Feed changes

Facebook's first big share price fall came in January when the company on announced major changes to news feed, one of its top products. Those changes included prioritizing content from users' friends and family over content from brands they follow.

CEO Mark Zuckerberg said he expected that the time users spend on Facebook and their engagement with the service would decline as a result. Those warnings sent Wall Street into a panic, with the company's share price closing down more than 4 percent on Jan. 12. The drop slashed Facebook's market value by $24.5 billion, which is more than the total value of Twitter.

Cambridge Analytica

Facebook shares experienced a similar slide in March when the New York Times and The Guardian reported how Cambridge Analytica, a British political consulting firm, had exploited Facebook to collect the data of more than 50 million users without their permission. Cambridge Analytica was then used by the Trump campaign in 2016 to target voters.

Facebook tried to get ahead of the reports by suspending the consulting firm on March 16, but the reports' still had impact. The company's share price closed down nearly 7 percent on March 19, the next day of trading, and Facebook's market value fell by more than $36 billion, nearly twice the total market cap Snap held at that time.

Zuckerberg accepts Washington's invitation

Facebook shares fell almost 5 percent on March 27 when reports broke that Zuckerberg had decided to testify before Congress. The decision came as pressure mounted on Facebook, following the Cambridge Analytica scandal. Just one day prior, the Federal Trade Commission announced that it would investigate Facebook's data practices.

The day cost Facebook's market cap nearly $23 billion. That's almost three times how much Macy's was valued at the time.

Facebook reveals its community standards

Facebook's share price fell by almost 4 percent on April 24 after the company published its rules that outline what content that is not allowed on its social network.

The Community Standards were published as Facebook continued to clean up its services of harmful content, such as misinformation, hate speech and spam. The document was released one day before Facebook's first earnings report since the Cambridge Analytica scandal.

Facebook saw its market value sink nearly $18 billion that day, which is a little more than the total value of Dish Network at the time.

Executive exodus

Facebook has seen a flurry of top executives leave the company throughout 2018. It's tough to quantify the effect that these departures have had on the company's share price, but one in particular had an impact.

The first was the departure of Jan Koum, the co-founder of WhatsApp. The company's stock price fell by almost 1 percent on April 30 after Koum announced his exit. Koum was one of Facebook's top shareholders after selling WhatsApp to the social network in 2014 for $19 billion.

Facebook's market cap floundered by almost $5 billion that day, the equivalent of Foot Locker's total value at the time.

A tough quarter following GDPR

Facebook's biggest drop of the year came on July 26, one day after hitting its peak of $217.50. The nearly 19 percent plunge followed Facebook released its second-quarter results on July 25, missing analysts' estimates on key metrics such as revenue and advertising projections.

Those misses were exacerbated on the company's earnings call, where executives warned that its revenue growth rates would be lower than a year prior. The company also reported ominous figures for its most important markets.

Facebook's daily user base remained flat in the U.S. and Canada and it declined by 3 million daily users in Europe following the introduction of the General Data Protection Regulation (GDPR), Europe's strict, new data privacy law.

The company's value fell by nearly $120 billion following the results, slightly less than Nike's total market cap at the time.

Sheryl Sandberg's Senate hearing

Facebook's share price dove again the week that COO Sheryl Sandberg testified before the Senate Intelligence Committee. Sandberg was there to discuss how Facebook had dealt with Russian meddling and what the company's was doing to prevent more misuse of its services.

Sandberg's testimony did not impress Wall Street, as she frequently responded to senators by promising to follow up on their questions. In particular, Sandberg's exchange with Sen. Kamala Harris stood out as the senator questioned Sandberg on how Facebook may have financially benefited from Russian trolls using the social network.

Altogether, Facebook's share price fell nearly 8 percent from its close on Aug. 31, the trading day before Sandberg released her opening statements, until Sept. 6, the day after the hearing. The company's market value fell by $38 billion, a little less than the total market cap Delta Airlines' had at that time.

Instagram loses its founders

In a similar episode to Koum's April exit, Instagram Co-founders Kevin Systrom and Mike Krieger suddenly announced their resignations from Facebook on Sept. 24. The pair had remained at Instagram, which is now the most popular social network among teens, since Facebook acquired the company in 2012.

The following day, the company's share price fell by 0.3 percent.

The security breach

Facebook on Sept. 28 disclosed it had suffered a security breach that may have impacted as many as 50 million users. Its share price closed down almost 3 percent that day.

A few weeks later, the company clarified that only 30 million users had been affected, but among them, 14 million had their names, contact information, gender, relationship status and other sensitive information exposed.

Facebook's value dropped by almost $16 billion that day, which is almost twice the market cap of Alaska Airlines.

The PR firm crisis

The share price's current slide has been going on since a Nov. 14 New York Times report that detailed Facebook's efforts to control public dialogue around the numerous problems on its social network, including its failure to prevent Russian meddling in the 2016 U.S. election.

Notably, the report detailed Facebook's relationship with Definers Public Affairs, a Washington-based opposition research firm. The company used Definers Public Affairs to write articles criticizing the business practices of rivals Google and Apple and downplay the criticisms on Facebook's. The agency also incorrectly pushed the idea that liberal financier George Soros was the person funding an anti-Facebook group

Since the report, Facebook has cut ties with the agency and CEO Mark Zuckerberg made himself available to the press to answer questions, but Facebook's share price keeps on tumbling.

The company's share price slid nearly 9 percent from its close on Nov. 14 to its close on Monday. That drop resulted in Facebook's market cap falling more than $36 billion, slightly less than the total value of Ford.

Facebook shares are getting crushed — Here’s what three experts say investors should know
VIDEO5:0705:07
Three experts on Facebook shares getting crushed