CEO Mark Zuckerberg succeeded in reassuring investors with his testimony before Congress on Tuesday, as FB stock rose 4.5 percent while senators grilled Facebook’s founder about privacy issues that have cast a shadow over the social media platform.
Data from as many as 87 million Facebook users was improperly shared with research firm Cambridge Analytica during the 2016 campaign season. Facebook stock has taken a beating in recent weeks as investors worry data security concerns and new regulations could impact Facebook’s user engagement and/or advertising business, but rose on Tuesday as Zuckerberg defended Facebook’s data security efforts and said he is fully committed to prioritizing privacy on Facebook’s platform.
Perhaps most importantly to investors, Zuckerberg strongly defended Facebook’s advertising model and said the company has never sold user data to advertisers.
“We think offering an ad-supported service is most aligned with our mission of trying to connect everyone in the world because we want to offer a free service that everyone can afford,” Zuckerberg said.
Last week, Zuckerberg reassured investors that the Facebook data scandal has had no “meaningful” impact on either user behavior or advertiser buying.
Facebook shares, which closed at $163.87 on Thursday, have dropped more than 11 percent over the past month on news that a political research firm, Cambridge Analytica, was able to access the personal data of millions of Facebook users for political marketing. Facebook is still up more than 17 percent over the past year, however.
Zuckerberg has been under intense scrutiny, testifying to Congressional lawmakers about Facebook’s privacy practices. He was grilled about Facebook’s fundamental business model, the way it uses data and what kind of regulation may be appropriate.