Facebook’s (NASDAQ: FB) shares price dived almost 5 percent on Monday as its core suite of services went offline.
Facebook’s main app, Instagram, WhatsApp, and Messenger crashed for a few hours on Monday and Tuesday. This impacted billions of its users. Facebook promptly tweeted: ‘To the huge community of people and businesses around the world who depend on us: we’re sorry.”
Facebook’s troubles did not end there. A former employee of Facebook raised several damning accusations at the social media giant on the news program 60 Minutes. This creates adverse political pressure on the company. On Tuesday, Frances Haugen is set testify against Facebook in front a Senate committee.
At pixel time, Facebook managed to restore much of its services.
Investors were spooked by Facebook’s troubles. As a result, Facebook’s share price tumbled to the lowest level since early June. Against this deepening decline, investors rightly wonder, ‘is Facebook’s bull trend over?’
The fact that prices were unable to break $380 for some time suggests heavy selling pressure there. This ceiling is near the $400 natural round number resistance level.
Looking to the downside, the near-term floor is noted at $320. But a test of the $300 level is possible given the entrenched downtrend. But this tech stock is near-term oversold – watch for a near-term bounce to retrace and cover to the gap at $340.
Facebook is one of the largest companies in the world with a market cap of nearly $1 trillion. It is widely followed by large funds and institutional investors.
According to MarketBeat, Facebook is tracked by 38 analysts, a following that is a larger than average stocks. The consensus rating for Facebook is ‘Buy’ with the average price target (PT) above $400.
However, in light of Facebook’s service disruption and recent price falls this PT may be too bullish.
What is more, a sector rotation is underway due to the rise in inflation expectations. Investors are buying material stocks such as energy and selling technology and other pandemic-beneficiary sectors.
Jackson has over 15 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.