Facebook shares drop on worries about Russian ads

The controversy over Russian ads is pummeling Facebook’s stock.

Reports that Facebook had trouble identifying ads from Russian trolls during the 2016 US presidential election, as well as Facebook’s ad team getting caught this month saying it reaches more Americans than actually exist, have eroded trust in the social network, critics say.

In a Monday note, Pivotal Research media analyst Brian Weiser said that being able to trust that Facebook has mastered its data is crucial for advertisers.

“A significant share of spending on advertising occurs simply because it is perceived to be effective, or because tools used to assess spending effectiveness are really used to justify a choice or refine pre-existing budgets,” Weiser said.

Facebook shares on Monday slid 4.5 percent to $162.87.

That’s despite the fact that CEO Mark Zuckerberg late Friday backed off a proposal to create a new class of Facebook shares, which would have allowed him to sell his shares in the company while still retaining voting control.

Several shareholders had filed a class action lawsuit against Facebook in an effort to stop the reclassification of the stock, arguing that not having voting rights could tank the value of their shares.

Zuckerberg had initially wanted to create the new stock classification so that he could continue to control the company while donating 99 percent of his shares before the end of his life.

The plan stirred up controversy, especially after text exchanges that were made public last December revealed Zuckerberg was being advised on his plans by Marc Andreessen, a Facebook board member who was supposed to be representing all Facebook shareholders.

In a statement posted on his own Facebook page late Friday, Zuckerberg said he backed off the proposal, first floated last year, because Facebook’s shares have since shot up in value.

“Over the past year and a half, Facebook’s business has performed well and the value of our stock has grown to the point that I can fully fund our philanthropy and retain voting control of Facebook for 20 years or more,” Zuckerberg posted.

The 33-year-old tech tycoon said he still plans to sell up to 75 million Facebook shares over the next 18 months — currently worth nearly $13 billion — to fund the Chan Zuckerberg Initiative, a charity he co-founded last year with his wife, Priscilla Chan.

Had the plan not been scrapped, Zuckerberg would have had to testify in court Tuesday at a tumultuous time for his…

Read the full article from the Source…

Leave a Reply

Your email address will not be published. Required fields are marked *