The damaging headlines surrounding Facebook‘s business may finally be having an effect on the company’s stock.
Facebook shares were down 5% in Monday trading, following a national television appearance Sunday by a whistleblower who has provided internal company documents to The Wall Street Journal, and—we now know—the Securities and Exchange Commission.
The complaints, which whistleblower Frances Haugen and one of her attorneys discussed on the CBS news program 60 Minutes on Sunday, allege that Facebook’s internal research does not square with what the company’s CEO Mark Zuckerberg and other executives have said publicly.
Facebook’s losses were steep even on an overall bad day for the market, with the benchmark S&P 500 index down 1.5%, and the Nasdaq Composite index down 2.5%.
Haugen has filed at least eight complaints with the Securities and Exchange Commission, that accuse the company of misleading investors through its public statements.
Haugen has sought federal whistleblower protection with the SEC, according to The Wall Street Journal. The Journal recently published a multipart series on Facebook that indicate company executives knew about the negative impact its platform was having on many users.
In a statement to Barron’s, Facebook said: “Every day our teams have to balance protecting the right of billions of people to express themselves openly with the need to keep our platform a safe and positive place. We continue to make significant improvements to tackle the spread of misinformation and harmful content. To suggest we encourage bad content and do nothing is just not true.”
Facebook shares have generally held up in the face of controversy, as Barron’s pointed out over the weekend. Even after the Journal’s “Facebook Files” series, many investors had yet to fundamentally change their view of the stock.
But the complaints filed with the SEC suggest the scandal could be headed in a new direction. Haugen has provided the SEC with a document trove thousands of pages long that she obtained from Facebook during her roughly two years at the company. The size and scope of the document collection, if the Journal’s initial series of reports is any indication, could form the basis of an enforcement action from the SEC.
The SEC didn’t immediately respond to a request for comment.
Prior scandals have damaged Facebook’s image, but even controversies with financial consequences haven’t permanently hurt the company’s revenue or profit. Last year, an advertising boycott spurred by a coalition of civil rights organizations successfully convinced global brands to pull back on Facebook ad spending for a month. The move didn’t have a lasting impact on the company’s financial performance, though. Facebook shares traded at an all-time high as recently as Sept. 7. The stock is down 15% since then, putting it in correction territory, which is defined as a drop from highs of 10% or more.
Haugen is set to testify in Congress Tuesday about how the company’s products affects young users.
Separately, on Monday, Facebook filed an attempt to dismiss an updated Federal Trade Commission antitrust lawsuit aimed at breaking up the company. The FTC initially filed the complaint last year, but a judge dismissed the suit. The commission has since refiled an updated version of the litigation.
Lastly, to complicate matters for Facebook, the company was experiencing outages across multiple platforms Monday, including Facebook, WhatsApp, and Instagram. The company confirmed some outages in a tweet. It was not immediately clear how widespread the issues were, but Barron’s was unable to login to several accounts.