Facebook (NASDAQ: FB) shares have been hit hard recently, and one technical analyst is betting on more trouble ahead.
Shares of the social media company fell nearly 3% on Thursday, bringing its quarter-to-date losses to a whopping 16%; that places Facebook on track for its largest quarterly loss since 2012, when it lost 30%, and its second-worst quarter since going public in early 2012.
Todd Gordon, founder of TradingAnalysis.com, sees an opportunity in the sell-off. The stock is certainly "technically damaged. I see no reason that we shouldn't be able to go back and retest the $150 mark, which was the old low here from April 2018. There's a lot of momentum here," he said, implying an 8% drop from the stock's current levels.
Though he is bullish on other corners of the market, he plans to hedge some of his long positions by taking a short position in Facebook. The stock has lost 8.5% in just one week amid a broader selloff in social media names and congressional testimony from technology executives, including Facebook's chief operating officer, Sheryl Sandberg, earlier this week.
Gordon is turning to the October monthly options for his trade. He's buying the Oct. 19 155-strike put and selling the Oct. 19 150-strike put for about $1.30, or $130 per options spread.
Shares in the social network giant removed 54 cents to $161.99, within a 52-week trading range of $149.02 to $218.62.
