Facebook, Inc. (FB) shares fell more than 3.5% during Monday's session amid growing privacy concerns. Last week, The New York Times reported that federal prosecutors are conducting a criminal investigation into data deals that Facebook struck with leading technology companies. A grand jury subpoenaed records from at least two smartphone manufacturers that may have broad access to hundreds of millions of Facebook users.
Analysts have been growing increasingly concerned over the impact of these privacy revelations. Needham analysts downgraded the stock from Buy to Hold, citing these privacy concerns and growing regulatory risk factors. Bank of America also lowered its price target from $205.00 to $187.00, saying that privacy changes could have an impact on Facebook's three-year growth. The social media giant had previously announced plans to focus on privacy.
From a technical standpoint, Facebook stock broke down from the 200-day moving average and pivot point to reach prior trendline and 50-day moving average support at $158.88. The relative strength index (RSI) fell to neutral levels of around 42.75, but the moving average convergence divergence (MACD) experienced a bearish crossover. These indicators suggest that the stock could see further downside over the coming sessions.
Traders should watch for a breakdown from trendline and 50-day moving average support to close the gap from late January and early February to just below S2 support at $151.62. If the stock breaks down from those levels, the next major area of support is trendline support at $145.00. If the stock rebounds from the trendline and 50-day moving average, traders could see a move higher to retest the pivot point and 200-day moving average, but that scenario appears less likely to occur.
The author holds no position in the stock(s) mentioned except through passively managed index funds.