Facebook shares continued to bleed sharply after falling 12.5% ??from the beginning of the week to $162 per share, due to the lawsuit against the company over leaking information to 50 million users of a British company, amid claims of Mark Zuckerberg's testimony before parliament.
The lawsuit was filed by a Facebook shareholder, named Fan Yuan, against the company before the federal court in San Francisco, where the company is accused of leaking information to 50 million users of the British company Cambridge Analytics, which it used to help with the campaign of US President Donald Trump.
The lawsuit noted that the company had made misleading and incorrect statements about the company's policies and the privacy of user data and had allowed third parties to access millions of data without their knowledge.
With this development in the case, claims are mounting from the appropriate committee in Parliament that the testimony of Facebook chairman Mark Zuckerberg should be presented to the Parliament to clarify the truth about the charges against the company, but this may face some obstacles as a person is not allowed to testify before parliament.
Facebook shares closed at $168.15 on Tuesday, hitting a six-month low of $ 162.00 yesterday, to lose up to $50 billion of market value.
On the technical front, we find that Facebook stock is moving in a bullish direction on all short-, medium- and long-term time frames.
After the announcement of the dismal news, the stock opened on a downside gap that broke through the short and medium term bullish channel.
The stock also fell below the $170.00 support which could remain a strong support level as if it managed to stop the decline in the short term.
Many technical indicators on the daily and four-hour timeframes provide selling signals and volume indicators also support selling since the volume of trading was at the highest since last year.
We expect the stock to start changing its short-term bullish trend from upside to the downside, in the case of stability below $170.00, with downside targets at $155.00, and if broken, the next target would be $144.00.
It should be noted that for bearishness to end, the price must stabilize
once again above $180.00, which means trading once again inside the bullish channel.