(Bloomberg) -- Facebook Inc. tumbled on Wednesday, with shares extending their decline throughout the session after the social-media company was sued by the District of Columbia over a privacy breach.
The news followed a report from the New York Times that Facebook had allowed more than 150 companies to access more personal data from users than it had disclosed, the latest in a series of controversies that have weighed on shares in 2018.
The stock fell as much as 7.3 percent, putting it on track for its biggest one-day percentage drop since its historic collapse in late July. Wednesday's decline extends a sell-off that has erased nearly 40 percent in value.
The lawsuit comes at a time when investors are increasingly concerned that Facebook could be facing greater regulatory pressure.
KC Rajkumar, an analyst at Lynx Equity Strategies, called the news “an incremental negative, as it is the first of its kind in the U.S. against FB.” In a note, he said the stock "continues to muddle along caught between plateauing user-growth and increasing regulatory pressure."
But a lot of bulls are still sticking by the the stock despite the negative headlines.
“Another shoe dropped today, but when we think about Facebook's fundamentals, its buyback program, we think it looks very attractive from a valuation perspective," JMP Securities analyst Ron Josey said in a phone interview. "A lot of these issues are in the past or have been fixed, and we think we're getting to a point where they've been priced in.”
Josey, who has a market outperform rating and $176 price target on Facebook, is one of many analysts to remain optimistic about the company's prospects.
According to Bloomberg data, 41 firms have a buy rating on the stock compared with nine at a hold and just three putting it as a sell. The average price target is $189, which implies upside of almost 40 percent from current levels.
To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Arie Shapira
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