Facebook stock could fall following Alphabet’s drop: Technical analyst

Shares of Google parent company Alphabet have fallen nearly 4 percent in the past week, and according to one technical analyst, another hot tech stock could be next to slide.

"In a world where things are bought and sold and rotation is the issue, not so much valuation, this is a little bit of a spread that maybe suggests Facebook is going to go the way of Microsoft and Google," Cornerstone Macro technical analyst Carter Worth said Friday on CNBC's "Options Action."

Looking at comparison charts, Worth noted that while Facebook might be the better performing stock, recently it's started to stall just as Microsoft and Google have.

Facebook stock closed at $113 on Friday, and Worth predicts it will drop to $108. "With a little luck, a little bit lower," he said.

Indeed, he believes that a drop to $98 would be reasonable, since even at that price, Facebook would remain within the bullish trend channel.

When it comes to Alphabet, Mike Khouw of Optimize Advisors says the real issue is that Alphabet is losing many of the quasi-monopolies it has in some businesses.

A Citigroup report released last week makes this same point: "Alphabet faces significant competition in nearly every aspect of their business, including competition from other general purpose and vertical search engines, social networks, other forms of advertising."

While Citi maintained its buy rating on the stock, the report took a good chunk out of Alphabet shares on Friday.

"Alphabet is under a great deal of pressure, because investors think they had the monopoly essentially and that monopoly is steadily being eroded by the likes of Facebook," Khouw said Friday on "Options Action."

Follow the show on Twitter @OptionsAction.

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Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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