Facebook Share Price Forecast October 2021 – Time to Buy FB?

Shares of American multinational technology company and social media giant Facebook (NASDAQ: FB) are down by another 4.4% as of 11 am EDT Monday. The decline, along with many other tech shares is part of a broader market sell-off. However, the Facebook decline can be attributed to another reason – the news of a global outage on the social media giant’s platforms.

Facebook – Technical Analysis

According to financial statement released by Facebook, the market cap is at $919.787 billion with total assets worth $170.609 billion. Revenue for 2020 was at $85.97 billion with a profit margin of 33.90% compared to $70.70 billion in 2019.

Moving averages for Facebook such as Exponential Moving Average (10)(344.47), Simple Moving Average (10)(344.21),  Exponential Moving Average (20) (352.69) and  Simple Moving Average (20)(358.95) are indicating a sell action. On the other hand, oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(11.69), Williams Percent Range (14)(−93.56) and Bull Bear Power(−36.64) and Ultimate Oscillator (7, 14, 28)(40.14) are neutral.

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Recent Developments

One of the biggest developments related to Facebook in recent times has been the revelation of the “Facebook Files” project by The Wall Street Journal. Reporters from the media house gained access to substantial internal Facebook documents detailing everything from how human traffickers and armed groups conduct nefarious business openly on the social network, problems with Instagram and how it harms the mental health of teenage girls and its controversial XCheck program. FB has since suffered a 12% decline in its value which equates to more than $100 billion in market cap.

The Wallstreet Journal has revealed the identity of the source earlier this week, which was revealed to be Frances Haugen. Haugen was a former Facebook insider who worked on the company’s Civic Integrity Team for nearly two years. This department was tasked with coming up with a solution for preventing the spread of political falsehoods, stoking of violence and the abuse of the social media platform by malicious national governments around the world. Antigone Davis, global head of safety for Facebook was summoned virtually by United States Senators to address the allegations raised by Haugen.

Along with this, FB shares have been affected after several of the social media giant’s platforms suffered a partial worldwide outage. This included their core social network platform, photo- and video-sharing app Instagram, messaging platforms WhatsApp and Messenger, and even virtual-reality gaming arm Oculus. The outage which lasted for several hours without any proper explanation has left investors wondering how it will impact the company.

Should You Buy FB Shares?

All investors know as of now is that the problem was caused by networking issues as confirmed by FB chief technology officer Mike Schroepfer. This was the company’s worst outage in over a decade, with the last one occurring in 2008. But given the current monthly active user base of 3.5 billion across all its platforms, the stakes are incredibly high this time around.

We know that a large percentage of FB’s revenue comes from advertising. As a result of the outage, advertisements were rendered useless for an extended period. Experts have commented that this outage may have cost the company over $100 million. Based on the company’s forecasts to generate a total of $35 billion this quarter, the outage could have resulted in significant damage to its further quarter earnings.

However, many analysts have said that the outage will work in favour of the company rather than negatively impact it.  It highlighted the importance of the platform to its users and advertisers. Additionally, a loss of several hundred million is minuscule compared to the $143 billion in revenue expected for the company next year.

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