The Facebook share price will be in focus this week, as FB is one of the tech companies that will release earnings reports for the 3rd quarter this week.
The tech companies have been the big winners during the pandemic, as companies shifted to remote work, and their products for enterprise use on virtual platforms and online workspaces experienced a boom in patronage as a result. Several tech companies surged to record highs; so did Facebook’s share price.
The Facebook share price hit all-time highs on August 26, 2020. It has undergone a slight correction and remains slightly cheaper than most of its peers. With such extended price surges, the companies now have a dilemma, and that is whether the earnings reports will justify such high price valuations.
With a 35% gain this year and a 98% increase in earnings in Q2 2020 that blew away estimates, Facebook share price seems to be on a roll. However, there are headwinds brewing.
The House Antitrust Panel released its Big Tech Antitrust Report on October 6. It accused Facebook of working to maintain its monopoly through the use of its data advantage. The report also said Facebook would identify any competition and acquire or kill such competition.
Alphabet is facing similar scrutiny and has been sued by the US Department of Justice. As investors expect earnings of $1.90 per share and revenue growth of 12% to $9.7billion, the focus of investors may not be on Facebook’s Q3 numbers alone, but also on the attention the company is now getting from the Federal Trade Commission (FTC).
Technical Outlook for Facebook
Facebook share price continues to trade within the ascending channel on the daily chart, albeit on light volume this Tuesday. Yesterday’s decline completed the dark cloud over candlestick pattern along with Friday’s candle. Confirmation of further downside on the stock as it aims towards the channel’s lower border requires a bearish outside day candle. This outside day candle has to break down the 277.53 support line for this objective to be achieved. Extension of the decline towards the next support level at to 258.91 also requires a breakdown of the channel’s lower border. This move also sets up the 240 6.49 support level as an additional price barrier to the south.
Of the other hand, failure to establish an outside day candle that can breach the 277.53 support may allow price to resume the upside move. The active daily candle resembles a pin bar which rests on this support level. If the price picture remains the same at the end of the day, there could be a strong case for a recovery move that aims to reclaim the channel’s upper boundary. This move also invalidates the dark cloud cover candlestick pattern at this stage. Extension of the recovery would bring 291.89 into the picture as the next resistance target. The previous double-top of September 2020 at 304.69 would also be in the reckoning.
Facebook’s earnings report is due for release on Thursday and will determine to a large extent, the near-term direction of Facebook share price action.
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Facebook Share Price (Daily) Chart
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