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Don’t blame Facebook’s privacy scandal, but shares of the social-media giant are unlikely to offer much return for investors in 2018 after the technical damage suffered in this week’s drubbing, said one widely followed chart watcher.
Read: Facebook’s Zuckerberg outlines 3 responses to Cambridge Analytica controversy
“The name is close to oversold and still in [an uptrend], but probably dead money for the remainder of 2018,” said Jeff deGraaf, chairman of Renaissance Macro Research, in a Wednesday note.
Also read: All the panic over Facebook is creating a huge buying opportunity, says this bull
Shares of Facebook FB, +0.74% rose 0.7% on Wednesday, trimming its weekly decline to around 8.5%. Shares sold off sharply Monday after weekend news reports said 50 million users saw their personal data harvested by a third-party data firm, while fears of more intense regularity scrutiny weighed on other social-media and technology shares.
See: Wall Street still likes Facebook, even as data controversy batters stock
Check out: Facebook’s future depends on how it manages its user-data crisis: Goldman
Facebook’s fall this week saw it make a one-year relative low versus the broad S&P 500 SPX, -0.18% deGraaf noted.
DeGraaf said the problem for the stock isn’t the privacy scandal but its “inability to keep up with its ‘ANG’ brethren over the last few quarters, suggesting the name was saturated and probably full of weak hands, the likes of who haven’t yet become frustrated with returns.”
Read: Mark Zuckerberg’s leadership called into question as Facebook controversy continues
The combination of Facebook, along with other highflying and market-leading tech shares Amazon.com AMZN, -0.29% Netflix Inc. NFLX, -0.32% and Google parent Alphabet Inc. GOOG, -0.62% are often dubbed “FANG” stocks.
Renaissance Macro
As deGraaf notes in the chart above, he expects Facebook to bounce to $180, but doubts it will be able to overcome resistance. Facebook shares posted an all-time intraday high of $195.32 on Feb. 1. They ended 2017 at $176.46.
This article was originally published on March 21.