Another Record Breaking Week For Zuckerberg
It’s been a record-breaking week for Facebook, sorry, Meta Platforms Inc this week. Shares in Facebook plummeted yesterday in response to a weaker-than-expected set of Q4 earnings. Technology shares in general have been on the ropes recently amidst a broader sell-off linked to rising US inflation expectations and Fed monetary policy tightening. However, Facebook shares in particular have been struggling since CEO Mark Zuckerberg announced the change in the company’s name from Facebook to Meta. With Facebook now just a platform within the Metaverse space. Confusing? Facebook’s stockholders certainly thought so.
Q4 Earnings Drop
This week, however, things turned from bad to worse for Zuckerberg. Shares tanked 25% at the open yesterday and fell further during the NY session. Q4 earnings were less than expected at $3.67 versus $3.84 expected. However, the biggest blow to the company was news that FB user numbers dropped by over 1 million in the final quarter, marking the first time that FB’s annual usership has shrunk in the platform’s 18 year history. Yesterday also marked the biggest 1 day loss for any company in stock market history. Wowza!
Recent Controversy
Facebook has had its share of controversy in recent times, facing massive amounts of criticism over its refusal to censor harmful content and false news during both Trump presidency, the Black Lives Matter protests and more broadly around far-right content being shared on the platform. With users leaving the platform in protest, it seems that the announced shift from Facebook to Metaverse has not gone down as well as was hoped. Following Zuckerberg laying out his plans for a digital future, the Metaverse, FB share prices have continued to tumble. Even fell “love him or hate him” tech icon Elon Musk expressed his doubt over Zuckerberg’s new roadmap.
TikTok Dominating
Shares in Meta Platforms Inc are now trading back at levels last seen in early 2020. With rival social media platforms such as TikTok continuing to grow in market share, the real risk now is that Facebook is simply old hat. If user numbers continue to dwindle this year, the platform is at real risk of going the same way as MySpace, remember that?
Technical Views
FB
The sell off this week has seen price breaking through the 298.96 lows and through the bear channel lows. Price is now sitting around the 244.52 level. With both MACD and RSI having fallen off a cliff in line with the drop, the focus for now is on further downside. While some near-term consolidation is likely. Unless price can get back above the 298.96 level, the risk is that price moves lower towards 214.18 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.