FXTM information and reviews
FXTM
95%
OctaFX information and reviews
OctaFX
94%
XM information and reviews
XM
93%
FXCC information and reviews
FXCC
92%
Libertex information and reviews
Libertex
91%
FxPro information and reviews
FxPro
90%

Facebook, Alphabet, Twitter stocks may react to Congress grilling


25 March 2021

The CEOs of Facebook (Mark Zuckerberg), Alphabet (Sundar Pichai), and Twitter (Jack Dorsey) are scheduled to face US lawmakers again today. Thursday’s virtual hearing before the US House Committee on Energy and Commerce is the latest in a series of regulatory challenges that has besieged social media companies, more so since the deadly Capitol riots on 6th January.

What’s the fuss?

Essentially, Congress wants to hold these social media companies more accountable for the spread of misinformation and disinformation across their platforms. However, these companies are currently able to claim legal protection under the 26 words that make up Section 230 of the Communications Decency Act of 1996. Under this law, these companies enjoy limited liability for the content that users post.

Both Republicans and Democrats want to change that fact, which may adversely impact how these platforms operate. Even US President Joe Biden had spoken about revoking Section 230 in the past.

Tech stocks facing multiple headwinds

Amid such heightened scrutiny, these social media stocks have not fared so well in recent months. The broader selloff in in US tech stocks in the wake of surging Treasury yields and concerns over extended valuations has only compounded matters.

Facebook has been trading sideways since registering its highest ever closing price on 26 August. A gust of gains this month has helped its 50-day simple moving average (SMA) avoid colliding with its 100-day counterpart. However, Zuckerberg’s company’s share price remains 7.16% lower from that record high.

Alphabet’s stock prices have fared relatively better than Facebook in 2021, though it still has been kept rangebound since posting its record high on 17 February. The stock has fallen 3.91% since then, though appears to be well-supported above the psychologically-important $2000 line.

Twitter’s peak on 1 March is the most recent record high compared to Alphabet’s and Facebook’s. Yet, Dorsey’s company has endured a torrid March, having unwound much of February’s gains and has plummeted to its 50-day SMA. Twitter now languishes 20% below its record high.

How markets react to Zuckerberg, Pichai, and Dorsey’s comments today could also have a major bearing on the FXTM Social Media index’s near-term performance. Note that this equally-weighted index comprises shares of Facebook, Google, Twitter, and Snapchat.

How resilient are social media stocks?

To be clear, these social media CEOs have weathered many a grilling by US lawmakers in the past, and their respective stocks have held up relatively well under such scrutiny.

Here’s how they’ve performed compared to key indices on a year-to-date basis:

How could these legal hurdles impact social media stocks in 2021?

As these regulatory challenges gather momentum, it could translate into stronger headwinds for social media stocks, potentially causing them to lag the broader US market as the year progresses. That would be a far cry from the way these tech giants powered US indexes higher throughout the pandemic in 2020.

This will not be the last that we’ll hear of regulators bearing down on how these platforms go about their business. Depending if, when, or what revisions are made to Section 230, the likes of Alphabet, Facebook, and Twitter may have to eventually incur more operating and legal costs. These social media companies could potentially be exposed to lawsuits from the public too. Investors may then be sensitive to how efforts to remain compliant with the law could weigh on these companies’ bottom line.

Considering that any revision or perhaps even the revoking of Section 230 won’t happen overnight, shareholders of Facebook, Alphabet, and Twitter may just have to endure a bumpy ride along the way. This added layer of uncertainty may well cap the upside for these social media stocks until this protracted saga reaches its eventual conclusion.

#source

Share:


Related

The Euro rebounded from the low
The Euro rebounded from the low

After updating its multi-year lows again, the major currency pair rebounded. The current quote for the instrument is 0.9656. Last night, the local interest in risks improved a bit, helping the asset to successfully correct...

29 Sep 2022

Gold Shows Signs of Life, But Heads Towards Another Losing Month
Gold Shows Signs of Life, But Heads Towards Another Losing Month

The precious metal is largely considered as a hedge to inflation, but it has not confirmed this status during the current year. It did kick it off with a rally, but as the Fed begun hiking rates back...

28 Sep 2022

Forex and Cryptocurrencies Forecast for September 26-30, 2022
Forex and Cryptocurrencies Forecast for September 26-30, 2022

Last week, all the attention of the markets was focused on the FOMC meeting of the US Federal Reserve, which took place on September 21. The probability of another rate hike by 75 basis points (bp)...

26 Sep 2022

Trading the SPDR S&P 500 ETF Trust
Trading the SPDR S&P 500 ETF Trust

The Standard & Poor’s (S&P) 500 Index measures the market capitalisation of the top 500 US largest corporations. Many traders and investors use the S&P 500 Index as a benchmark...

23 Sep 2022

Gold pauses as traders await Fed decision
Gold pauses as traders await Fed decision

The anticlimactic performance of gold continues as the prospect of aggressive rate hikes by central banks around the world amid heightened inflationary pressures...

21 Sep 2022

Developing a forex trading plan: All you need to know
Developing a forex trading plan: All you need to know

All forex traders have different backgrounds, market views, risk appetite, thought processes and expectations. Therefore, traders should not just blindly follow what other traders do...

20 Sep 2022


Editors' Picks

HFM information and reviews
HFM
89%
IronFX information and reviews
IronFX
88%
FXCM information and reviews
FXCM
87%
NordFX information and reviews
NordFX
85%
Vantage information and reviews
Vantage
84%
FP Markets information and reviews
FP Markets
81%

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.