- The New York Times Wednesday published a 6,000-word exposé saying Facebook leadership is “delay, deny and deflect” when dealing with crises, such as Russian interference during the 2016 presidential election.
- Facebook executives responded to the investigation late Thursday, admitting they are too slow but never intended to hide what they knew.
- Shares tanked in March in wake of the Cambridge Analytica data scandal, recovered later, but plunged again after disappointing second-quarter earnings in July.
- Watch Facebook trade live.
Facebook plunged 4% Friday after executives responded to The New York Times investigation into the company’s chaotic leadership. Shares touched an intraday low of $US137.77, their weakest level since March 2017.
In a 6,000-word exposé published on Wednesday, The Times described Facebook’s response to Russia-linked activity on its site ahead of the 2016 presidential election as “delay, deny and deflect.” The Times also noted that Definers, a public-relations firm that had a close relationship with Facebok, disseminated research to journalists linking the billionaire George Soros to anti-Facebook movements.
“I did not know we hired them or about the work they were doing, but I should have,” she wrote.
She also denied claims that she blocked internal investigations into Russian election interference. “Mark and I have said many times we were too slow,” she said. “But to suggest that we weren’t interested in knowing the truth, or we wanted to hide what we knew, or that we tried to prevent investigations, is simply untrue.”
Facebook shares have been under pressure this year. In March, the stock dropped nearly 20%, shedding $US50 billion of market cap, after news broke that the political-research firm Cambridge Analytica accessed 50 million user profiles illegitamtely .
But after Mark Zuckerberg testified to Congress in April and the company crushed first-quarter earnings, sentiment on the stock has turned around. Shares erased all of their previous losses and rallied to a record high of $US218.62 in July.
That was before its second-quarter earnings sent shares tanking by 20%. In a rare miss, the social-media company failed to hit Wall Street’s expectations on sales, profits, and active users, and management warned investors revenue growth will slow down in the coming quarters. Facebook is now trading 37% below its July peak.
“The underlying problem that we see is that the company has been so focused on growth at any cost that it has failed to sufficiently invest in processes that might anticipate problems, acknowledge problems fast enough or fix problems fast enough,” Pivotal Research analyst Brian Wieser, a long-time Facebook bear, wrote in a note sent out to clients in October. He has a “sell” rating and $US125 price target – 10% below where shares are currently trading.
Facebook was down 24% this year.