Social media giant Facebook released earnings after the bell Wednesday.
The stock was slightly higher in extended trading after the company beat on earnings and sales estimates, success it credited to increased e-commerce activity in 2020.
Facebook headed into its report sharply lower. The shares fell nearly 4% on Wednesday and lost all gains for the month. Todd Gordon, founder of TradingAnalysis.com, said there are a few key levels to watch for now.
He said $280 is acting as resistance in the chart, while $245 should act as support. Facebook crossed above $285 on Tuesday before falling back Wednesday.
Platforms such as Facebook have been criticized both for their influence in the political conversation and their response to former President Donald Trump‘s election misinformation. Twitter permanently suspended Trump’s account, while Facebook enacted an indefinite ban.
“The biggest challenge for Facebook specifically is to sort of get over the bad light in which they’re being portrayed, whether deservedly or not,” Gordon told CNBC’s “Trading Nation” before the earnings results on Wednesday. “They’ve obviously had a few, you know, poor incidents that’s reflected on the stock.”
Increased regulation from President Joe Biden and the new administration will likely not be a major concern, though, he said.
“Just look at the price action of Google once Biden was inaugurated. There was all this talk about antitrust in Google coming in and Google ripped as soon as Biden was inaugurated … so I think those concerns a little over overdone,” said Gordon.
Steve Chiavarone, portfolio manager at Federated Hermes, said the conference call later Wednesday could shed light on the broader economy. He will pay attention what CEO Mark Zuckerberg says on advertising spending and what it might tell him about business confidence.
“You’re looking for signs of what’s the business environment likely to be going forward, what do they think recoveries and ad spends might be. What’s the pace of the recovery that they’re building in,” he said. “It’s really just a sign of what are the read-throughs for the broader economy from their window in the advertising spend going forward. I think that’s going to be the biggest macro takeaway.”
Disclosure: Gordon holds FB.
