Financial Setbacks Rock Social Media Giants Twitter, Facebook and Snap Last Week, but Can They Make a Turnaround?
Stocks in the social media fraternity received a major pounding last week after executives from social media giants like Twitter and Facebook were grilled by Congress, resulting in an increasing worry that regulations might just new regulations might be implemented!
In fact, in the past two weeks, the likes of Facebook and Snap have seen their stocks fall by 7 percent value, while that of Twitter fell by 11 percent.
Managing director of FX Strategy at BK Asset Management, Mr. Boris Schlossberg, commented on the stocks of these social media giants, saying that they could well be preparing for a second act.
In an interview with CNBC, Boris stated that he feels perhaps Facebook is the only jewel at this point because a majority of the market has been ignoring the potential that Instagram has.
Facebook Might Diversify Its Revenue
Despite the fact that Facebook has relied heavily on advertising revenue over the years, this could change soon as the company is poised to make the shift to its transactions as well as shopping on the platform that is Instagram.
Additionally, they might even venture into online gambling on the platform, as per comments by Schlossberg.
In turn, this could prove as a massive source of revenue for Facebook in a current market that is totally being underpriced at this given moment. Schlossberg further adds that Facebook has noticed that the advertisement part of their business is slowly losing traction, hence it would be wiser for them to transform it into a more transactional product if they would like to turn the tide around.
At the moment, 98 percent of Facebook’s revenue comes from advertising, while the remaining 2 percent comes from other fees as well as payment options.
Despite Facebook’s massive sell-off last week, its technical show that the company still has a lot of hope and potential. That is as long as it does not transcend one significant and important critical level. This is according to the president of Blue Line Futures, Mr. Bill Baruch.
Trying to Shift the Dynamics
Baruch adds that with Facebook, they can opt to salvage another unsuccessful week. He also comments on their trend line, saying that it began at the very beginning of 2017, and moves all the way to their low which is $161.
If the stock closes below this, then it will trigger a panic and subsequent accelerated selling.
That being said, Facebook’s stocks closed at $162.53 last week on Thursday. However, the shares experienced a rise in trading on Friday, closing at $164.
Of note is that the company has not had its stock close below $161 from April.
Twitter Seeing Its Share of Bad Days
Additionally, Baruch commented on Twitter, stating that the company looks to be in far worse shape.
For starters, he discusses the fact that the company failed to make the average of the 100-day move, and it’s even moving way below the anticipated 200-day moving average. That being said, Baruch does not see it being a buy until the stock hits to roughly about $27.
On Thursday last week, Twitter closed way below its anticipated 200-day moving average. This was the first time that the incident happened since September 2017. Keeping this in mind, one can clearly see that it is a decline of about 13 percent from the $27 buy level that Baruch had predicted.
Social media platforms such as Facebook have come under a lot of scrutiny regarding their sharing of information to third party members without consent from users. In turn, this has sparked a sort of worrying trend amongst consumers, prompting them to shy away from investing in the stock.
In turn, this causes a rippling effect in the stock value, leading to the reduction in its price value.
Facebook particularly has borne the brunt of this radicalization. Ever since information surfaced that the company had shared data from their customers to support President Trump’s candidacy, the company has lost billions of dollars in investment.
That being said, people will have to wait and see to determine whether Facebook, Twitter, and Snap will have the ability to bounce back their stocks’ abysmal performances.
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