Trader warns Congress at a ‘boiling point’
Social actions are in the spotlight.
Deutsche Bank raised its Facebook price target to a street peak on Monday, highlighting tailwinds in the ad space, while analysts at Truist upgraded Twitter to buy what they see as the “leaf of most exciting product route “they have seen from the company.
But, the regulatory overhang persists. The CEOs of Facebook, Google and Twitter testified before Congress last week at a hearing on disinformation. Platforms have been criticized for failing to hold themselves accountable for their content, especially fake news, and for removing or promoting different voices.
Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, said Capitol Hill’s next move should be a very real concern for investors in these stocks.
“The question really arises as to how Congress decides to act on this Section 230 matter of the Communications Decency Act and that has the potential to change the business model,” Sanchez told CNBC’s Trading Nation on Monday.
While regulatory issues for large tech companies have been present for many years, Sanchez said this is a more immediate threat to social stocks.
âToday’s Congress is probably even more invigorated because both sides of the aisle have something to be angry about.â¦ You have both Tories and Liberals who both feel like you have been harmed in some ways by the actions of the company. This is just not the case. good prospects, and I think it is coming to a boiling point, probably in a year or two, “said Sanchez.
Ari Wald, head of technical analysis at Oppenheimer, is more constructive on stocks.
âWe see opportunities and I think in general the industry, because it’s been so soft the last few months, it has made it attractive compared to the rest of the market which has really grown a bit. ‘There’s a potential for turnover here, “Wald said during the same segment.
Facebook, for example, appears to have upside potential. The stock is the second-best performer among FAANG stocks so far this year behind Alphabet – its 6% gain is better than the declines of Amazon, Apple and Netflix.
âIt’s been more or less limited over the last six months and it’s created a symmetrical triangular pattern,â Wald said. “The stock is now breaking through this upward consolidation pattern. Here are the levels to be aware of – there is support at $ 270, this is the previous break point. As long as that holds, we see a move up to 310. $. This would be the height of the previous range measured from the break point. “