Is Twitter or Facebook stock a buy as Trump launches TRUTH Social?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 21, 2021
  • Donald Trump has announced plans to disrupt social media with TRUTH Social.
  • He was banned from Twitter and suspended on Facebook after his supporters stormed the US Capitol.
  • Twitter shares edged slightly lower while Facebook remained flat on Thursday.

On Thursday, reports emerged that Donal Trump is planning to launch his own social media platform, dubbed TRUTH Social. The former US President was banned from Twitter Inc. (NYSE:TWTR) and suspended by Facebook Inc. (NASDAQ:FB) after his supporters stormed the US Capitol.

As a result, Trump wants to disrupt the social media space by launching a social platform that “[stands] up to the tyranny of big tech”, BBC reported.

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Trump accused Facebook and Twitter of silencing opposing voices in the US. Therefore, with the ex POTUS looking to introduce what he believes would offer an equal playing ground for American’s which social media stock should you buy?

Twitter

Twitter shares trade at a steep P/E ratio of about 139.18, making the stock less attractive to value investors. 

However, with analysts expecting its earnings to grow at an average annual rate of 41% over the next five years, it could be a compelling option for growth investors.

The stock is up 19.64% this year, slightly underperforming the S&P 500 index, which is up more than 22%.

Source – TradingView

Technically, Twitter shares seem to have pulled back recently to find support from the 100-day moving average.

However, with the stock far from reaching oversold conditions, the current decline could continue for the foreseeable future. 

Therefore, investors could target downward profits at about $62.01 and $58.19, while $69.07 and $72.78 are resistance zones.

Facebook

Facebook has bounced back recently to recover after falling to new 4-month lows. As a result, the stock trades at a P/E ratio of 25.26 and a forward P/E of 21.23, making it a compelling option for value investors.

In addition, analysts forecast its EPS to grow by 57% this year before rising at an average annual rate of 26.80 over the next five years. Therefore, growth investors could also find it as an exciting option for their portfolios.

Source – TradingView

Technically, the stock seems to have completed a bullish breakout from an ascending channel formation. As a result, the stock has advanced towards the 100-day moving average, indicating a shift in the market sentiment.

Therefore, with shares yet to hit overbought conditions, the current rally seems poised to continue. As such, Investors could target profits at about $363.23, or higher at $380.81, while $319.35 and $300.83 are support levels.

Facebook looks like a better buy

In summary, Facebook looks like an exciting buy opportunity while Twitter creates options for investors looking to short the stock.

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