Facebook, Inc. (Nasdaq: FB) 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.
[See: 6 Things to Know About Mark Zuckerberg’s Manifesto.]
Zuckerberg also said he deeply regrets not doing more to prevent manipulation of Facebook’s platform by Russian operatives during the 2016 campaign. He disclosed that Facebook did not initially notify the Federal Trade commission of the Cambridge Analytica data issues because the company had “considered it a closed case.”
Zuckerberg also said he is open to fair data regulations to protect users.
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.
GBH Insights head of technology research Daniel Ives says GBH’s recent surveys back up Zuckerberg’s claims that Facebook users don’t seem to be shying away from the platform.
“We found that roughly 15 percent of Facebook users polled will decrease in some capacity their use of the platform in light of the Cambridge issue, and we estimate a negligible number of users have deleted their Facebook accounts despite the backlash,” Ives says.
He says only about 3 percent of Facebook’s advertising revenue is at risk even in a worst-case scenario.
Ives says investors likely picked up on Zuckerberg’s confidence on Tuesday.
[See: 10 of the Best Tech ETFs to Own.]
“Zuckerberg is conciliatory but firmly holding the stance of Facebook and its business model, which is sending a bullish message to the Street,” Ives says.
Zuckerberg’s testimony will continue when he appears before the House Committee on Energy and Commerce on Wednesday.
GBH has a “highly attractive” rating for FB stock.
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Zuckerberg Testimony Triggers a Relief Rally for Facebook, Inc. (FB) originally appeared on usnews.com
