Shares of Twitter and Snap fell on Tuesday, as rival Facebook faced further backlash over a privacy breach of user data.
Twitter shares were down 10 percent midday Tuesday, and Snap shares were 4 percent lower. (Facebook fell nearly 6 percent, a day after tumbling another 6.7 percent.)
It’s unclear why Twitter and Snap dropped so sharply, but their rival for ad dollars — Facebook — has been stung by a report from The New York Times and The Guardian over the weekend alleged that a data firm, Cambridge Analytica, improperly gained access to the data of more than 50 million Facebook users. That report, and those that followed, has gotten the attention of state regulators and federal congressional intelligence committees, commerce committees and judiciary committees. The FTC may also be probing Facebook.
Heath Terry, lead internet research analyst at Goldman Sachs, told CNBC on Tuesday that the reports could impact the growth story of Facebook, which makes money off of digital ads, just like Twitter and Snap. Prior to the breach revelations, Facebook’s leadership had committed to increase spending on security.
Twitter, though, is also the subject of regulatory scrutiny elsewhere. The Israeli government is considering legal action against Twitter over failure to remove content from “terrorist organizations,” Bloomberg reported.
Earlier this month, Twitter CEO Jack Dorsey solicited proposals on how to improve Twitter’s ability to address abuse faster on the platform. Twitter shares are still up over 100 percent over the past year.
Still, another digital advertising provider, Google, didn’t see a big stock decline on Tuesday. There hasn’t been reporting linking Twitter or Snap to the Cambridge Analytica allegations.
— Reporting by CNBC’s Tae Kim.
