Embattled social media giant Facebook (FB) just got a boost from heavy hitting investment firm Sequoia Fund.
Sequoia Fund, which is valued at $4.2 billion, has bought a small stake in Facebook.
Ruane, Cunniff & Goldfarb, Sequoia’s investment manager, announced to clients in a letter last week that it bought the stake toward the end of the first quarter, following the revelations surrounding the Cambridge Analytica scandal. It explained that “the recent controversy enabled us to purchase a very unusual business franchise riding several powerful secular trends at a price-earnings multiple only a little higher than that of the overall stock market.”
While Sequoia acknowledged that Facebook “has unquestionably committed sins for which it must now atone,” the firm explained that it chose to purchase a stake as it believes “it remains a far more competitively advantaged, economically attractive and faster-growing enterprise than the average American business.”
“Though doing so will involve substantial cost, we believe the company will take necessary steps over the coming months and years to restore the damaged trust of its users and advertisers,” the letter continued.
Facebook’s shares have dropped nearly 17% since the start of the scandal, closing at $157.20 on Friday. But Sequoia has sought a turnaround itself in recent years after suffering significant losses in 2015 and 2016 associated with its holdings in Valeant Pharmaceuticals, which lost a significant portion of its value.
Sequoia also acquired stakes in Vivendi SA and Universal Music Group in the first quarter, and maintains holdings in Alphabet, Amazon, Berkshire Hathaway, and MasterCard.