Interactive Investor

Can Facebook stock overcome global outage hit?

7th October 2021 08:26

Alistair Strang from Trends and Targets

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After an embarrassing outage affected millions of users, independent analyst Alistair Strang looks for any long-term damage to the share price.

The social network never appears out of the headlines, usually for the wrong reasons. This week, a service outage tragically was repaired after a few hours. The company owner also featured in The Pandora Papers tax avoidance cache, there is a ‘whistleblower scandal’ and topping things off, UK staff are being given a three-month deadline to reduce working from home.

We avoid Facebook (NASDAQ:FB) for none of these reasons, just disliking a service which tends to be regarded as ‘always on’ by many devoted users.

Rather more important than our distaste of the platform, gathering questions regarding the share price future are appearing in the financial media.

Visually, there is certainly cause for concern and it appears a ‘final straw’ trigger level is making itself known. Below $320 looks very capable of triggering reversal to an initial $291. As the chart below highlights, this will represent a lower low since the Red trend break. Such an event, therefore, takes the price into a region where below $291 looks like provoking further ongoing reversals to $220.

We can calculate below such a level for the longer term, but such a target level effectively matches the share price highs, pre-pandemic. As a result, should such a frightening drop occur, there’s a strong argument favouring a bounce if this $220 target ever actually appears.

We should be quite cynical about these potentials, thanks to the potential stop loss level of just $335. The markets are rarely quite as generous to traders!

If we chose to review a miracle gain scenario, above $335 calculates with a movement up to $367. If exceeded, our secondary works out at an eventual $377, along with probable hesitation.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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