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(Bloomberg) – A rebound in mega-cap tech stocks that halted four weeks of decline for the Nasdaq 100 stock index had one notable exception this week: Facebook Inc.
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A 0.3% gain for the social media giant on Friday was not enough to reverse losses suffered by the stock earlier in the week amid close scrutiny of its products and a global outage. Facebook shares ended the week down almost 4%, marking the fourth consecutive week of decline, the longest such period since the peak of the Covid-19 crisis in March 2020.
Shares are down 14% from September’s peak, the worst result among America’s biggest tech companies. The weakness contrasted with the gains of other large tech companies such as Microsoft Corp. and Alphabet Inc., both of which rose about 2% this week.
Recent losses reflect higher yields on Treasuries, which have weighed heavily on growth stocks, as well as a number of headwinds specific to business. This week saw a long global blackout of the company’s sites, as well as testimony in the Senate from a former insider-turned-whistleblower, who argued that Facebook puts profits above user safety.
Despite these problems, the stock’s drop leaves some to think about. Facebook’s price-to-earnings ratio is 24.4, lower than the S&P 500 index of 26.3. The stock is also trading at a discount to its historical average multiple, according to data compiled by Bloomberg . JPMorgan wrote on Thursday that the stock appears undervalued and is buying the pullout.
If the stock were to return to record levels, it would be in line with historic precedent, which has allowed Facebook to recover from a number of high-profile crises.
Truist Securities analyst Youssef Squali echoed this view on Friday, writing that “this time it’s different, but the end result is most likely the same – Facebook should always be a winner.” The firm reiterated a purchase note on the title.
(Updating stocks with closing prices throughout.)
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