Meta Platforms Could Sell Off to 270
Meta Platforms Inc. (FB), the tech giant formerly known as Facebook, has fallen more than 8% in the last two sessions and is now testing the six-month low posted in October. A breakdown will violate a trendline in place since March 2020, setting the stage for continued downside that could reach the 270s. Political headwinds are responsible for part of this decline but fallout from Apple Inc. (AAPL) iOS 13 privacy options is doing greater damage to bullish sentiment.
Whistleblower Returns to Congress
Social media stocks performed well in the first half of 2020, when the pandemic triggered lockdowns around the world, but they’re all losing ground right now in reaction to the omicron variant. These companies need to turn engagement into advertising dollars and the new variant has the power to slow the recovery underway since the second quarter of 2020, in turn lowering marketing budgets at Fortune 500 customers.
Whistleblower Frances Haugen returned to Congress on Wednesday to testify at a House hearing on regulatory reform. She wasted no time reiterating her critical view on Meta, noting the company “wants you to get caught up in a long, drawn out debate over the minutiae of different legislative approaches. Please don’t fall into that trap. Time is of the essence… You have a once-in-a-generation opportunity to create new rules for our online world”. Sadly for reformers, Congress is unlikely to make big changes because they receive enormous industry donations.
Wall Street and Technical Outlook
Wall Street continues to ignore the firestorm of political criticism and logistical headwinds, with consensus stuck like glue to an ‘Overweight’ rating based upon 35 ‘Buy’, 4 ‘Overweight’, and 10 ‘Hold’ recommendations. In addition, two analysts recommend that shareholders close positions. Price targets currently range from a low of $250 to a Street-high $460 while the stock is set to open Thursday’s session nearly $100 below the median $410 target.
Meta Platforms broke out above 2018 resistance near 220 in May 2020, entering a strong uptrend that topped out at 304.67 in September. The stock cleared that resistance level in April 2021, lifting into an all-time high at 384.33 at the start of September. It shed more than 75 points into October and bounced, rolling over at 50-day moving average resistance this week. A breakdown through support at 308 could signal much greater downside into 2022.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.