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Alan Farley

Facebook Inc. (FB) price action has shaken off a boycott by top tier advertisers in reaction to alleged ‘hate speech’, in the wake of nationwide protests following the George Floyd killing. The initial boycott news triggered a 4-day 38-point slide, which was promptly scooped up by traders and investors looking to ‘buy the dip’. The stock is now situated less than a point under the all-time high, flaunting harsh corporate criticisms.

Zuckerberg Takes Rebellious Tone

CEO Mark Zuckerberg has advised that Facebook will team up with civil rights groups and experts in an effort to forestall the boycott, but organizers are standing firm, awaiting more concrete action. It’s understandable because Zuckerberg has established a poor track record on privacy and political issues since the 2016 election, when foreign agents attempted to influence U.S. opinion through fake accounts.

Zuckerberg has taken a rebellious tone despite those conciliatory actions, stating “my guess is that all these advertisers will be back on the platform soon enough”. He also insists that “we’re not gonna change our policies or approach on anything because of a threat to a small percent of our revenue, or to any percent of our revenue”. He could be right because big advertisers leading the boycott make up just a small percentage of the company’s $70-billion advertising revenue.


Wall Street And Technical Outlook

Wall Street has ignored the boycott so far, with a Canaccord Genuity upgrade marking last week’s only institutional activity. Consensus remains highly bullish, with 28 ‘Buy’ and just 4 ‘Hold’ ratings. No analysts are recommending that investors sell the stock at this time. Price targets currently range from a low of $185 to a street high $300 while Facebook is now trading about $5 under the median $249 target.

The technical outlook looks outstanding despite the latest controversy, with the stock already in breakout mode and trading just below the all-time high. Accumulation-distribution indicators have actually surged to new highs in the last week, generating a bullish divergence that predicts price will soon follow. The sky’s the limit given these technical tailwinds, with Wall Street’s lofty $300 target easily attainable in the next one to three months.


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