Over the course of the last month, the chatter around the technology sector has largely centered around one story: Facebook.
The Cambridge Analytica data scandal broke in mid-March, when the tech space and the broader market were already under pressure amid a sector rotation. The social media giant’s privacy scandal weighed further on the group, sending the S&P 500 technology sector skidding into correction territory and just bouncing back to lead the market in Monday trading.
Facebook stock has actually outperformed its social peers in one month’s time. While Facebook shares have tumbled 15 percent in the last month, Snap and Twitter shares have dropped 21 percent in the same time.
Max Wolff, chief economist at The Phoenix Group, told CNBC’s “Trading Nation” that this pattern is about to end as Facebook CEO Mark Zuckerberg readied his congressional testimony for Tuesday and Wednesday. Here are his reasons why.
While it may make sense to see Facebook stock slammed as hard as it has been, it is less intuitive to think Facebook shares would not be the biggest loser since its privacy scandal came to light. But Facebook hasn’t slid as much as Snap and Twitter.
It is likely that congressional committee members will ask tough questions of Zuckerberg as they relate to the Cambridge Analytica scandal and the company’s handling of private information, which would in turn raise uncomfortable questions for the entire social media landscape.
There may be some specific concerns about when and how disclosures around Facebook’s privacy scandal came to light, which would in turn further weigh on Facebook shares.
Bottom line: Though Facebook shares are in a correction, the stock is still outperforming Snap and Twitter in one month’s time. That will likely end, according to one economist.
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