FB is ripe for a strong meltdown

Meta’s share price has seen a dramatic crash in 2022 as worries about the company’s future remain. Shares fell from an all-time high of $383 to $158 currently. Its market cap has grown from over $1 trillion to around $480 billion. Subsequently, Mark Zuckerberg’s net worth grew from around $66 billion to $58 billion.

Is Facebook a good deed?

Meta’s stock price has been on a steep downtrend over the past few months as investors worry about the company’s growth. Additionally, the volume of advertisers using its platform has decreased following the recent iOS update. This upgrade allowed users to block tracking from advertisers such as Google and Facebook.

There are also concerns about the company’s pivot to the metaverse. It invests billions of dollars with the aim of becoming a top player in the industry. However, many investors are worried about whether the industry will take off.

For example, some of the most popular blockchain metaverse projects like Decentraland and Sandbox have seen usage plummet. Additionally, the company recently shut down Novi, its cryptocurrency wallet.

Additionally, Meta’s stock price has fallen sharply as usage of its key properties declines. For example, data from Morgan Stanley indicates that Facebook and Instagram saw usage plummet. However, TikTok has continued to be a major player in the social media industry. The report added that:

“In our view, these slowing trends in time spent, combined with META’s growing and successful efforts to emphasize Reels, indicate a growing tactical risk that Reels’ engagement will be more cannibalistic for time and revenue at short term.”

As a result, investors are starting to value meta platforms as value stocks rather than growth stocks.

The daily chart shows that the FB stock price has been on a strong downtrend over the past few months. The stock has formed a descending channel which is depicted in blue. Recently, its attempts to move up the channel encountered strong resistance at $173. It also broke below all moving averages.

As a result, Meta’s stock price will likely continue to decline as sellers target the next key support level at $140. A move above the resistance point at $170 will invalidate the bearish view.

Karen J. Nelson