Social media giant Facebook made a profit after the bell, a release that could come with additional scrutiny.
Platforms like Facebook have been criticized both for their influence on political conversation and for their reaction to the misinformation from the election of former President Donald Trump. Twitter has permanently banned Trump’s account, while Facebook has issued a perpetual ban.
“The biggest challenge for Facebook is to overcome the poor light in which they are portrayed, whether they are deserved or not,” Todd Gordon, founder of TradingAnalysis.com, told CNBC’s “Trading Nation” on Wednesday. “You obviously had a couple of bad incidents that are reflected in the stock.”
However, increased regulation by President Joe Biden and the new administration shouldn’t be a big problem, he said.
“Just look at Google’s price history after Biden was revealed. There was all that antitrust talk on Google, and Google ripped it as soon as Biden was revealed. I think those concerns are a little exaggerated,” said Gordon.
Regarding key levels, Gordon says $ 280 should act as resistance on the graph while $ 245 should act as support. Facebook crossed over $ 285 on Tuesday before dropping back on Wednesday.
Investors may not be so kind to large-cap tech and growth stocks that don’t deliver, said Steve Chiavarone, portfolio manager at Federated Hermes.
“The incremental message flow for some of the big tech and growth names just isn’t going to be quite as good as it was last year when we emerged from the pandemic. That doesn’t mean it will be bad. I don’t expect their results are terrible. We just believe that the trend that has been emerging since Labor Day is likely to continue, “said Chiavarone in the same segment.
Funds switched to small caps and value stocks and large-cap growth stocks like Facebook and Apple in the second half of last year. Chiavarone said this was likely due to the shift in fundamentals from “terrible to just bad,” a shift that investors rewarded as growth stocks shifted from “perfect to just good.”
Still, Chiavarone will be listening to the conference call with CEO Mark Zuckerberg for a glimpse into ad spend and potential business confidence information.
“They’re looking for signs of how the business environment is likely to perform, how they think the restores and ad spend might play out. How quickly will they recover,” he said. “It’s really just a sign of what the readouts are for the wider economy in terms of future ad spending. I think this will be the biggest macro takeout.”
Analysts assume that, according to FactSet estimates, Facebook will post a profit share of $ 3.19 after $ 2.56 in the previous year. Sales are said to have increased 25% to $ 26.35 billion.
Disclosure: Gordon holds FB.
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