Facebook’s very, very bad day: Services go down as stock plunges in wake of whistleblower revelations

Facebook Inc. services experienced widespread outages Monday morning, adding to the social network’s miserable day.

shares dropped as much as 6% to an intraday low of $323, which would be their worst single day decline since a 6.3% fall logged on Oct. 30, 2020. The stock outpaced a 1.5% loss on the S&P 500 index
and a 2.3% loss on the tech-heavy Nasdaq Composite Index.

The decline followed a national broadcast of a whistleblower’s allegations that the social media network placed profits before safety. Late Sunday, ViacomCBS Inc.’s
news program “60 Minutes” interviewed former Facebook data scientist Frances Haugen, who alleges that the social-media giant has been deceiving investors about how it has been dealing with hate speech and misinformation on its platform.

For more: Facebook whistleblower says her goal is not to damage the company

Haugen provided thousands of pages of documents to The Wall Street Journal, which formed the basis of the publication’s The Facebook Files series. Haugen is scheduled to testify before Congress on Tuesday morning and is also seeking whistleblower protection in complaints filed with the Securities and Exchange Commission.

Adding to all of that was a widespread outage of Facebook services, including Instagram and WhatsApp, that started just before noon Eastern time. Even the status dashboard Facebook uses to communicate its availability to developers was not working Monday.

A Facebook spokesman took to Twitter Inc.’s
platform to confirm the issues.

“We’re aware that some people are having trouble accessing our apps and products,” spokesman Andy Stone said. “We’re working to get things back to normal as quickly as possible, and we apologize for any inconvenience.”

While Facebook did not go into further detail on the cause of Monday’s outage, experts said on Twitter that it appeared to be a problem with the company’s domain-name system, or DNS.

Amid the maelstrom, Facebook filed a motion to dismiss the Federal Trade Commission’s amended antitrust lawsuit against the company, saying the agency’s complaint still lacked evidence Facebook violated antitrust laws.

“This court gave the agency a second chance to make a valid claim,” the company said in its filing to the U.S. District Court for the District of Columbia. “But the same deficiency that was fatal to the FTC’s initial complaint remains: the amended complaint still pleads no facts plausibly establishing that Facebook has, and at all relevant times had, monopoly power.”

For more: FTC has a chance for a do-over in its ‘fiasco’ antitrust case against Facebook, legal experts contend

Facebook’s motion was expected, given Chief Executive Mark Zuckerberg’s vow to strenuously fight any government attempt to impede the company through antitrust action.

Under new chair Lina Khan, the FTC refiled its case in August, buttressing its monopoly arguments with more analysis on market share and how Facebook used billion-dollar mergers with Instagram and WhatsApp to “buy or bury” competition. The agency in its suit asserts Facebook should be broken up.

The judge has until mid-November to respond to Facebook’s motion to dismiss the case.

Through a series of public humiliations and recriminations, Facebook stock has largely avoided any fallout. Shares have gained 18.4% so far in 2021, outpacing the 16% growth of the S&P 500 index
in that time, and have more than doubled over the past three years, gaining 106.2% in that time as the S&P 500 grew 51%.

From Barron’s: Why Facebook Stock Is Still a Buy Despite Controversies

Institutional analysts continue to recommend the stock as well. According to FactSet, 38 of the 51 analysts covering Facebook — 75% — rate it as a “buy” or equivalent, while 12 rate it “hold” and only one calls the stock a “sell.” The average price target as of Monday morning was $421.55, nearly 30% higher than the going rate.

Other social-network and Big Tech stocks also suffered Monday. Twitter, Snap Inc.
and Pinterest Inc.
shares were all down by a larger percentage than Facebook, while Apple Inc.
Microsoft Corp.
Alphabet Inc.
and Amazon.com Inc.
shares were all down more than 2% on the day.


Candice Cearley

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