Shares of social media giant Facebook Inc. (FB) saw their biggest one-day gain in nearly two years on Tuesday, recovering over $21 billion in market capitalization as the company’s CEO and founder Mark Zuckerberg appeared before U.S. lawmakers.
The Tech titan’s 4.5% stock surge reflected a broader applause on the Street as investors saw Zuckerberg responding better than expected to questioning by U.S. senators in the wake of the Cambridge Analytica data scandal. Over recent weeks, the FAANG stock has crashed on investor fears regarding a regulatory backlash in response to news that the political analysis firm allegedly used information on 87 million Facebook users without their consent to aid the Trump campaign in the 2016 presidential race.
Closing up at $165.04 on Tuesday, FB still reflects a 10.7% loss over the most recent one-month period and a 6.5% decline year-to-date (YTD), leading the group of high-flying tech stocks that have been hard hit by a surge in volatility, which put an abrupt end the nine-year bull market earlier this year. (See also: How Bears May Fuel Stock Market’s Recovery.)
Zuckerberg Pledges to Fix Issues at Tech Titan
Some of Facebook’s rise can also be attributed to broader market optimism on Tuesday. The S&P 500 jumped 1.3%, while the Nasdaq Composite Index rose 2% on news that Chinese leader Xi Jinping would lower tariffs on auto imports, easing worries regarding an impending trade war as the White House becomes increasingly protectionist with its new trade policies. (See also: Do Tech Stocks Face a Heavily Regulated Future?)
On Tuesday, in a joint hearing of the Senate Judiciary and Commerce committees, Zuckerberg appeared to have clearly come prepared, remaining calm and collected as he explained how the global platform was striving to correct its issues. In addition to details shared in his prepared remarks, the CEO clarified Facebook’s relationship with advertisers, indicating that “there’s a very common misconception about Facebook that we sell data to advertisers.”
The tech executive also spent a portion of time simply explaining to lawmakers how Facebook’s business runs.
“How do you sustain a business model in which users don’t pay for your service?” asked Sen. Orrin Hatch of Utah.
“Senator, we run ads,” responded Zuckerberg.
Ahead of the hearing, both Facebook and fellow Silicon Valley social media pioneer Twitter Inc. (TWTR) said that they would support the Honest Ads Act, a proposed piece of legislation that would require tech companies to disclose how much they are paid for placing political ads on their platforms. Shares of Jack Dorsey’s Twitter also jumped 5.4% on Tuesday.
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