President Trump failed an attempt to remove social media protection under Section 230 when signing the stimulus package, and abandoned requests to include the lifting in final language. Facebook, Inc. (FB) is still facing a difficult year 2021 at the state level Antitrust law Legal action for collusion with Alphabet Inc. (Aco) restrict market access and a democratic government that is not much friendlier than the conservative wing of the Republican Party.
The central theses
- The Facebook share shows a decline relative strength by the end of the year.
- Much of Facebook’s wounds are self-inflicted, and social media rivals are zooming to new highs.
- Antitrust measures at home and abroad could point to poor returns for 2021 or a long-term spike.
- Wall Street has ignored the growing headwinds fixated on Facebook’s ad revenue.
CEO Marc Zuckerberg has made few political friends in recent years. He has first resisted attempts to filter fake news and then selectively applied filters targeting right-wing ideology. He also makes enemies in the tech arena and goes to war with the Dow component Apple, Inc.AAPL) about iOS privacy changes insisting it hurts small businesses despite the tech giant destroying thousands of small businesses for bigger profits.
The European Union has become more aggressive than the United States when it comes to regulating and controlling behavior on social media, and is proposing the Digital Markets Act, which will enforce anti-competitive behavior with severe sanctions. Meanwhile, the U.S. Federal Trade Commission (FTC) has launched an investigation into how social media companies collect, use, and share data.
Facebook shares have performed poorly in the past few months, despite the Nasdaq 100 index will end the year near an all-time high. The stock has lost 12% since peaking at $ 305 in August and could be close to a two-month low by 2020. Rival Twitter, Inc. (TWTR) has grown by more than 31% over the same period, showing that Zuckerberg’s problems extend well beyond the political adversity that is targeting the social media industry.
The Wall Street Consensus on Facebook sleeps behind the wheel when it comes to growing headwinds and maintains a “Strong Buy” rating based on 33 “Buy”, 2 “Hold” and 1 “Sell” recommendations . Price targets Currently, they range from a low of $ 205 to a street high of $ 375, while the stock is set to open the session more than $ 50 below the median of $ 321 on Monday. This humble placement can signal solid upside potential or major disruption, with analysts ignoring negative catalysts.
Antitrust laws are laws developed by governments to protect consumers from predatory business practices and to ensure fair competition. They are applied to a wide variety of questionable business activities including market allocation, bid rigging, price fixing, and monopolies.
Facebook Daily Chart (2018-2020)
The stock made a second trip into 2018 resistance near $ 220 in May 2020 and broke out to test new support in July. It then started in a trend wave, adding about 75 points to the all-time high in August at $ 304.67. A quick decline in the 50 days exponential moving average (EMA) above $ 240 closed a trading range that will remain in effect at the beginning of the last week of 2020. Two attempts to reach the center of the area have failed accumulation Readings have now fallen to three-month lows.
The stock has traded below the 50-day EMA for the last five sessions, showing decreasing relative strength increasing the potential for a test within reach support and the 200-day EMA in the 240s in January. Meanwhile the monthly stochastic oscillator is currently in a full sell cycle predicting weakness right in the first quarter and potentially exposing a trip into breakout support near $ 220.
The bottom line
Facebook is facing growing headwinds that could translate into weak returns for 2021 or a long-term spike.
Disclosure: The author held no positions in any of the above securities at the time of publication.