Facebook stock price falls after being hit by a groundbreaking lawsuit

Facebook (NASDAQ: FB) stock price closed the week more than 2% lower after the company was hit by a groundbreaking lawsuit from antitrust agencies and a high number of states. 

Fundamental analysis: Is Facebook in trouble?

A high number of states and the federal government filed antitrust lawsuits against the social media giant due to alleged monopolistic practices to obtain dominance. 

The Federal Trade Commission (FTC) requested a permanent injunction in federal court, with a special focus placed on WhatsApp and Instagram, which were acquired for $19 billion and $1 billion, respectively. 

The lawsuit shows that over 40 public prosecutors signed have backed it after a year-long investigation in Facebook’s practices. 

Earlier this year, Facebook agreed to pay a $5 billion civil penalty, the highest federal privacy fine in history, on similar allegations.

Technical analysis: Testing short-term support

Facebook stock price initially fell 4% on the lawsuit news before regaining some of the lost ground to close the week at $273.55. As seen in the chart below, the price action is testing the diagonal support line around the $270 mark, which is further supported with the 100-DMA at $268.85. 

A break of this zone would pave the way for a deeper pullback to $250.00, where investors looking to buy Facebook shares are waiting. 

Summary

The FTC and higher number of states filed a lawsuit against Facebook on the ground of alleged monopolistic practices.