FB Stock Struggles After Privacy Breach Allegation

The social media giant is ripe for analyst downgrades

Deputy Editor
Mar 9, 2020 at 2:50 PM
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Twitter isn't the only social media name in focus today, with investors turning their attention toward Facebook, Inc. (NASDAQ:FB) following reports that the Australian privacy regulator just sued the tech giant over allegations that it shared personal details of over 300,000 people with market researcher Cambridge Analytica without permission. FB has extended its dramatic dive lower today, off 6.11% at $170.04 after hitting a nine-month low of $165.19. 

Facebook's steep selloff, along with the broader market, hasn't been pretty. The stock suffers a year-to-date deficit of 17.1%, thanks in part to FB's gap below former support at the $205 region, and recent pressure at its descending 10-day moving average. What's more, the equity just came off its third-straight weekly dip, it's longest since last August. 

FB Chart March 9

Options bears are likely cheering these new lows. While Facebook's 10-day put/call volume ratio of 0.61 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) indicated that long calls are still outnumbering long puts on an overall basis, this ratio sits in the 95th percentile of its annual range. This means there has been a much bigger appetite or these bearish bets of late. 

Short interest has also been inching higher, up 4.2% in the last two reporting periods, though there's still plenty of room of the bearish bandwagon. The 1.8 million shares sold short represent a slim 1.1% of the stock's available float, or less than two days at its average pace of trading. 

A round of analysts upgrades could stir up even more headwinds on the charts too. Twenty-seven of the 29 in coverage consider FB a "buy" or better, while there isn't a "sell" to be seen. Plus, the consensus 12-month price target of $245.65 is a lofty 44.1% premium to current levels. 

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