Facebook shares crushed after data controversy

Last Updated Mar 19, 2018 5:38 PM EDT

Facebook (FB) shares fell nearly 7 percent Monday amid controversy over how Cambridge Analytica, which was hired by President Trump's 2016 campaign, was able to harvest personal data from more than 50 million Facebook users

The 6.8 percent drop lopped nearly $40 billion off Facebook's market value.  

Equity analysts with Raymond James said in a report to clients that "continued concerns over Russian targeting and data misuse are clearly weighing on the shares."

Facebook says it initially gave out the data to a researcher who claimed it would be used only for academic purposes. Facebook claims the researcher then "lied to us" and passed the content onto Cambridge Analytica. That firm then used the data to build "psychographic profiles" about voters. 

Investors are worried about the fallout for Facebook from prosecutors, regulators, and advertisers. 

Massachusetts attorney general Maura Healey wrote on Twitter that her office is launching an investigation into the data usage. "Massachusetts residents deserve answers immediately from Facebook and Cambridge Analytica," Healey wrote. 

Politicians in both the U.S. and the U.K. are demanding that Facebook CEO Mark Zuckerberg explain how the data theft occurred and how the company plans to protect consumers. 

Sen. Richard Blumenthal, D-Connecticut, on Monday urged the Federal Trade Commission to investigate Facebook, in a tweet calling the company's policies to protect consumer data a "hollow promise." He also urged Congress to examine what he described as links between Cambridge Analytica and "Russian state interests."

Facebook suspended Cambridge Analytica over the weekend. The social network said it had removed the app in 2015 when it learned about the violation of its policies. 

"Several days ago, we received reports that, contrary to the certifications we were given, not all data was deleted," Facebook deputy general counsel Paul Grewal wrote in a Friday post. "We are moving aggressively to determine the accuracy of these claims."