Facebook tumbles again as its stock takes a dip to approximately 5 percent Monday – it can be considered as the company’s lowest level since February 2017, as the social media giant took a hit after a damaging and controversial report concerning its top management got out in the New York Times.
The company remains under pressure since it will most likely be the third consecutive month that it is recording a loss, the social media giant’s most extended down period considering their track record. In addition to that, this will likewise be Facebook’s longest quarterly losing streak, which it has not experienced since 2013, and their first full year on a wave of disappointing earnings since it has gone public. With some experts saying that the stock is still on the verge of going downwards, the social media giant should remain on the lookout of what might be coming.
Craig Johnson, a chief market technician at Piper Jaffray, stated on CNBC’s “Trading Nation” that if he will look at it from a technical standpoint, there is no doubt that the long-term uptrend support line off the  lows got violated. He added that he would choose to stay on the sidelines, instead of putting fresh money to work, or even further reduce positions at this point.
The shares of the company are currently on track for its third consecutive month of sustaining a loss, something that Facebook has never done before, and its second quarter of skidding downwards, which the social media giant has not experienced since 2013.
There are some who are quite negative on the stock near term but think that it may perhaps be a value play eventually given that its valuation dropped very drastically. The CEO of Strategic Wealth Partners, Mark Tepper, mentioned to “Trading Nation” that he considers the ratio of price-earnings to growth, or PEG ratio, as a means to measure the value of a stock by using its price-earnings ratio and factoring in the earnings growth rate – sensible at this particular circumstance.
In addition to that, Tepper also articulated that if you have around two- to five-year timeframe, Facebook essentially looks attractive at these levels. However, if you will be looking at it from a short-term perspective, it will probably be quite challenging for the stock with mounting headwinds.
He also said that the market had been punishing businesses with very stagnant growth, and this is what the social media giant is currently experiencing. Having said this, he doesn’t think that Facebook is about to see the light at the end of the tunnel soon.
Tepper expressed that since the company is making relatively aggressive investments particularly for concerns like improving its ad transparency, finding and taking down fake accounts, as well as verifying sources of news and removing those that are proven to be false, all of these initiatives are most likely going to drag on Facebook’s profits near term.
In 2018, the social media giant’s share dropped to 25 percent.