Try to pick the bottom in Facebook’s battered stock at your own risk.
“I am disturbed about the number of stories coming out lately about power struggles, and Instagram leaders leaving to me was a warning sign — it’s an important platform,” veteran tech analyst Michael Robinson of Money Map Press said on Yahoo Finance’s The Final Round on Monday. “It’s [Facebook] a deeply troubled stock — I don’t know where the bottom is and I am not sure anybody really does.”
Instagram’s co-founders, Kevin Systrom and Mike Krieger, resigned in late September amid turmoil on how to further monetize the photo-sharing site.
Robinson didn’t rule out Facebook diving below the $100-a-share mark soon. “We haven’t seen the early stage speculators step in and support the stock,” Robinson added. Facebook shares closed Monday’s session at $136.38.
A tough few months for Facebook
Facebook’s stock has fallen on hard times over the last few months as bad news on the company has piled up. Shares of the social media giant are the worst-performing member of the tech stock club known as FANG (Facebook, Amazon, Netflix, Alphabet/Google)‚ down 24% year to date.
The latest downdraft has been fueled by a New York Times report that chief operating officer, Sheryl Sandberg, ignored and concealed the full extent of Russia’s use of Facebook to influence the U.S. presidential election in 2016. In a subsequent Facebook post, Sandberg acknowledged that she and CEO Mark Zuckerberg were “slow” to respond to potential election meddling.
Meanwhile, reports continue to swirl of in-fighting between various Facebook execs, including Zuckerberg and Sandberg.
Not helping sentiment on Facebook was another so-so third quarter by its lofty standards. Daily active users on Facebook’s platform only grew slightly to 1.49 billion in the third quarter from the second quarter, missing expectations of 1.5 billion. Operating profit margins plunged to 42% from 50% as Facebook increases investment on beefing up data security efforts.
And the Yahoo Finance chart says …
Facebook’s stock is the only FANG component trading below its key 200-day moving average (red line below). To tech analyst Robinson’s point, with the technical picture on Facebook broken, it’s unclear when buyers will emerge. It’s possible Facebook will have to shake up its executive team or show better profit margins (or both) before investors entertain the notion of jumping into the fallen social media beast.
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Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi
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