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Facebook Stock Tumbles by a Quarter – Time for a Tech Rebound?

Facebook stock

Facebook (NASDAQ: FB) stock price lost a quarter of its value during the coronavirus market selloff, but market pundits believe internet stocks are in a good position to face uncertainties.

Tech firms are seeing more users on their platforms, who stay for longer, because people are being forced to stay at home due to pandemic. While Facebook is also not immune to the economic meltdown, analysts expect a rebound once shares pull out of one of the most significant market pullbacks in years. The higher viewership and customer engagement could also help it beat the consensus estimate for the following quarters.

Facebook’s other brands, such as  Instagram, Messenger, and WhatsApp are also experiencing higher than usual user engagement.

“The diversification of Facebook indicates stronger resilience and likely a greater ability to endure dramatic body blows,” said MKM Partners analyst Rohit Kulkarni.

Wedbush calls the Facebook stock a “best idea” with strong long-term positioning against the coronavirus pandemic.

Facebook Stock Tumbles by...

However, Facebook may also experience the worst impact of tumbling traveling, airline and hotel industries, as these industries spend heavily on advertisement campaigns. All these industries are among the biggest laggards of the worst market crash in years. The S&P 500 index lost 28% of its value over the last month.

The stock markets, however, started showing some optimism after bailout packages and interest rate cuts all over the world to shore up the economy. All the US stock indices generated small gains in Thursday trading while oil prices rebounded more than 20% in a single session. The US president has been actively working with economists to avoid economic meltdown and the stock market crash. The Trump administration is seeking to make a $1trn stimulus package, which may see close to half of that going in direct cash payments to ordinary Americans.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.