Mark Zuckerberg actually got $1 billion richer following the news of Facebook's $5 billion fine for the biggest scandal in the company's history

AP Photo/Andrew HarnikFacebook CEO Mark Zuckerberg testifying before a House panel in April 2018.
  • The Federal Trade Commission approved a $US5 billion fine for Facebook last week as a result of its investigation into the Cambridge Analytica scandal.
  • Facebook shares actually jumped on the news, rising 1% on Friday to the highest they have been in the past year.
  • As Facebook’s primary stockholder, CEO Mark Zuckerberg stands to profit handsomely from the stock-price jump: The value of his Facebook stake increased by more than $US1 billion in 30 minutes following the news.
  • Visit Business Insider’s homepage for more stories.

Facebook is about to get slapped with a $US5 billion fine by the Federal Trade Commission because of the Cambridge Analytica scandal, where data from over 50 million users was used without permission.

In a surprising twist, Facebook’s stock value actually rose by 1% on Friday following the news of the FTC’s landmark fine – and Facebook CEO Mark Zuckerberg owns a whopping 88.1% of Facebook’s shares.

Per an April financial filing, Zuckerberg owns 410,497,115 shares of Facebook. At their price of $US202.31 before the news broke around 3:45 p.m. ET, his shares would be worth $US83 billion. At their price of $US204.87 around 4 p.m., those shares would be worth $US84.1 billion.

What that means is that the value of his shares increased by over $US1 billion in just 30 minutes.

Facebook stock (July 15, 2019)Google/FacebookFacebook’s stock price was down slightly early Monday.

As Facebook’s primary shareholder, Zuckerberg can see a huge windfall from a stock-price increase of just 1%.

The $US5 billion FTC fine is intended to punish Facebook for mishandling user data and presumably not to increase the wealth of Facebook’s primary shareholder. Facebook could not be immediately reached for comment.

Read more:
Why Facebook’s stock jumped despite facing a record-breaking $US5 billion FTC penalty: ‘A slap on the wrist’

The fine is a record for the FTC – a move seemingly intended to set a precedent for the kind of punishment that tech giants could receive for mishandling their users’ data.

But many have characterised it as essentially a slap on the wrist for Zuckerberg and his social-media company.

Facebook zuckerberg cambridge analytica trial AP3Pablo Martinez Monsivais/APZuckerberg appeared before Congress after the Cambridge Analytica scandal.

But why is Facebook getting hit with such a huge fine in the first place?

As Business Insider’s Rob Price put it last week: “For the last year, the FTC has been investigating Facebook’s various privacy snafus. The agency started with a probe into whether Cambridge Analytica’s misappropriation of 87 million users’ data amounted to a breach of the company’s 2012 consent decree with it. It later expanded the inquiry to incorporate the California tech giant’s myriad other recent privacy scandals.”

And on Friday, news broke that the result of that investigation would be a $US5 billion fine and some additional oversight of Facebook’s business practices. Soon after, the company’s stock value jumped.

It may sound counterintuitive, but the logic is simple: Because Facebook expected a fine and planned its annual financials around that expectation, investors reacted positively to that plan playing out – and the fine not being bigger.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.