Why Facebook's Stock Hit Highest Price In A Year After $5 Billion US Fine

Because investors feared the government would limit the company's ability to gather personal information, which is the source of its business model, or would shut the company down.

The belief is that this fine is relatively small and is an acceptable price to pay for continued access to and sale of individuals' data. JL


Jon Swartz reports in MarketWatch and Cory Doctorow reports in Boing Boing :

The 3-2 vote along party lines - Republicans compose a majority of the FTC -stems from
Facebook’s entanglement with Cambridge Analytica and the improper treatment of the data of tens of millions of individuals. Rather than shutting Facebook down, the FTC fined them $5B, which is only 30% of the revenue from a single quarter and less than a quarter of the company's annual profits. It's basically a license fee for criminality, a tax on lawbreaking that allows the company to retain the vast majority of its profits from criminal activities. And the street knows it. After the FTC announced the fine, Facebook's share price went up.
Boing Boing In 2011, the US Federal Trade Commission put Facebook under consent decree after the company "deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly [allowed] it to be shared and made public."

The way the FTC generally works is that if it catches a company doing something terrible, it issues one of these "consent decrees" which amount to, "don't do it again, or we'll take the company away."
But Facebook did it again. Hard. And rather than shutting Facebook down, the FTC fined them $5B, which may sound like a lot, it's only about 30% of the revenue from a single quarter and less than a quarter of the company's annual profits. It's basically a license fee for criminality, a tax on lawbreaking that allows the company to retain the vast majority of its profits from criminal activities.
And the street knows it. After the FTC announced the fine, Facebook's share price went up.

And as Peter Kafka notes, regulatory compliance costs aren’t exactly a deterrent either: Facebook will pay the fine, eat the cost of a few more lawyers and PR people to ensure compliance with this new order, and carry on with the business of, uh, issuing a new worldwide currency while exposing underpaid contractors to horrifying videos of people being murdered for $15 an hour.

MarketWatchFacebook Inc. shares closed at their highest price in nearly a year Friday after reports that the Federal Trade Commission has approved a $5 billion fine, a record amount that would still be less than a quarter of Facebook’s annual profit.
The 3-2 vote along party lines, first reported by the Wall Street Journal and then confirmed by other news outlets, completes a long-running probe into several privacy miscues committed by the social-media giant. Republicans compose a majority of the FTC, which has passed the matter to Justice Department’s civil division.
The probe stems from Facebook’s entanglement last year with third-party data firm Cambridge Analytica and the improper treatment of the data of tens of millions of individuals. The FTC launched a probe to determine if the episode violated a 2012 consent decree between the agency and Facebook over the protection of user privacy. Facebook has 2.38 billion monthly active users.
The fine for violating a consent decree may not be the end of penalties for Facebook, however. The settlement could include government restrictions on how Facebook handles user privacy, and Facebook, Apple Inc. AAPL, +0.91%  , Alphabet Inc. GOOGL, +0.15% GOOG, +0.14% and Amazon.com Inc. AMZN, -0.19% all face possible antitrust investigations for their business practices, which depend greatly on the accumulation of data.
Facebook’s stock FB, -0.56% has been damaged over the past year by of a series of privacy controversies, as investors waited to hear what penalties the company would face. Shares have rebounded in 2019, though, and closed Friday at their highest price since late July 2018 after the reports confirmed what Facebook had expected the penalty to be. Shares were trading roughly even before the report landed about 30 minutes ahead of the close Friday and then closed with a 1.8% gain at $204.87. The stock is 6.2% below its all-time closing high.
as $5 billion. The company could claim another $2 billion financial blow when its second-quarter results are released July 24.
Facebook reported about $5 billion in profit for every quarter last year except for the fourth quarter, when holiday ad sales pushed its net income closer to $7 billion. When Facebook took the $3 billion hit in first-quarter earnings, the online-advertising company still reported nearly $2.5 billion in net income.
The FTC did not immediately respond to an email seeking comment Friday afternoon. A Facebook spokesman declined to comment or confirm the news.
Reaction to the long-anticipated ruling was swift and scathing. “It appears that Facebook got off easy yet again,” Robert Weissman, president of Public Citizen, a nonprofit consumer advocacy group, said in a statement.
“The FTC should have forced Facebook to abandon plans to integrate Facebook Messenger, Instagram and WhatsApp; and it should have, at minimum, imposed severe privacy-protecting conditions on Facebook’s plans to launch a new global, privatized currency,” Weissman said. “The odds are unlikely that such measures were included in the settlement.”