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Tech Stocks Roundup: Facebook Shutdown, Whistleblower Accusations

Check out the latest news and performance numbers from the top technology and FAANG stocks like Apple, Amazon, Google, Netflix, Microsoft and more.

Shares of Facebook  (FB) - Get Facebook, Inc. Class A Report recovered somewhat Tuesday, up about 2.5% after the social media company fully restored its services. The flagship site and its affiliate services, Instagram and Whatsapp, went offline Monday for nearly six hours.

Facebook and its photo-and-video sharing app Instagram were back online around 6 p.m. Eastern Monday. WhatsApp reportedly was coming back in some places, while other customers were still having difficulties getting service Monday evening.

Facebook said the shutdown was caused by a faulty configuration change. "We also have no evidence that user data was compromised as a result of this downtime," the company said in a blog post. The company appeared to be facing a worldwide failure of external and internal services at the DNS, or Domain Name, level, according to reports. 

"We’re aware that some people are having trouble accessing our apps and products. We’re working to get things back to normal as quickly as possible, and we apologize for any inconvenience," Facebook said in a tweet.

Facebook shares fell 4.9% to close at $326.23 Monday but regrouped slightly Tuesday to 332.75.

The company's stock started falling early Monday after a whistleblower accused the company of prioritizing profits over the impact of hate speech.

A former Facebook product manager, Frances Haugen, in an interview on CBS's "60 Minutes" on Sunday night, said, "There were conflicts of interest between what was good for the public and what was good for Facebook. And Facebook over and over again chose to optimize for its own interests like making more money."

Haugen's legal counsel has reportedly filed at least eight complaints about Facebook with the U.S. Securities and Exchange Commission. Her lawyer has said she has shared internal documents with attorney generals in California, Tennessee, and Vermont.

Facebook's Andy Stone told the Wall Street Journal that, "To suggest we encourage bad content and do nothing is just not true.”

Haugen Tuesday testified before Senate lawmakers regarding the social media group's influence on children. She urged members of Congress to change the regulatory framework under which the social networking giant operates, or it will continue to buy corporate profits over the safety of its users.

"As long as Facebook is operating in the shadows, hiding its research from public scrutiny, it is unaccountable. Until incentives change Facebook will not change. Left alone Facebook will continue to make choices that go against the common good, our common good," said Hagues in her opening remarks.

"The severity of this crisis demands that we break out of our previous regulatory frames," she added.

Haugen submitted documents to Congress that proved Facebook has repeatedly misled the public about the "safety of children, the efficacy of its artificial intelligence systems, and its role in spreading divisive and extreme messages." 

She demanded that Facebook make changes to its operations. Facebooks needs to be willing to accept some trade-offs on profit, she reiterated.

"Yesterday, Facebook had a platform outage. But for years, it has had a principles outage. Its only principle is profit," said Sen. Marky.

Facebook is expected to report its third-quarter earnings in the first week of November. 

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Shares of social media platforms Twitter  (TWTR) - Get Twitter, Inc. Report and Snapchat  (SNAP) - Get Snap, Inc. Class A Report fell after Haugen's accusations that the company prioritizes profit over hate speech, which turned investors warier of other tech platforms.

The tech sector is crumbling, led by Facebook's decline. Jim Cramer said on an episode of Mad Money that the social media giant has become a pariah after this latest round of leaked memos in addition to the outage. Making matters worse, there are still too many tech IPOs, deals that need to get pulled to lessen the supply of shares.

Right now, Facebook hangs in the balance as a best-of-breed company, according to Cramer. “Great companies prevail,” Cramer wrote recently on Real Money. “Best-of-breed companies don't go away and you can't sell them because they are built to last and have the best management.”

Currently and out of nowhere, rising interest rates are leading to the wholesale abandonment of technology stocks. “At this very moment you can't touch Salesforce  (CRM) - Get salesforce.com, inc. Report or ServiceNow  (NOW) - Get ServiceNow, Inc. Report; Apple  (AAPL) - Get Apple Inc. (AAPL) Report is toxic,” Cramer said. “Facebook is a black hole and Amazon  (AMZN) - Get Amazon.com, Inc. Report has its numbers cut because of labor costs.”

Facebook shares gained back some of Monday's decline of almost 5% that, alongside a broader sell-off in tech stocks partly linked to rate pressures, lopped more than 2.1% from the Nasdaq and spilled over into markets around the world. The slump also hived more than $6 billion from the personal wealth of founder and CEO Mark Zuckerberg. 

Stocks bounced back on Tuesday from the lowest levels since July as investors eyed bargains in battered tech stocks while tracking inflation pressures in the global economy.

What matters to Cramer, however, is that you don’t throw away an Amazon or an Apple because others are doing so. “Think about all of the times you saw people dump Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report or Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report only to come back to them when the industrials falter or the banks miss their numbers, which will probably happen again when they report in a few weeks,” Cramer noted.

That’s why you need to be thinking about what's best of breed and can figure things out. “Do you really think that Amazon doesn't know how to rein in costs?” Cramer asked. “Are you sincerely worried about Apple's iPhone buildout because you see electricity being cut back in China causing factories to close?"

Although Amazon may have some issues near term, the long-term outlook remains sunny amid strong fundamentals, JPMorgan analyst Doug Anmuth says. He has an overweight rating and a $4,100 price target for the stock. “We believe Amazon is well-positioned as the market leader in e-commerce and public cloud, where the secular shifts remain early,” Anmuth said.

“AMZN has a very strong track record around investing in future growth opportunities. We believe the second-half dislocation creates a compelling opportunity over time,” he added.

Here is a breakdown list of the technology and FAANG stocks to watch right now based on their performance over the past week:

Facebook Faces Scrutiny From Congress

Facebook is facing scrutiny from Congress over its services, but analysts at RBC Capital are over the moon for the stock, initiating the social-media company to outperform with a $425 price target. The firm says that "there's just nothing else quite like" the social media platform, which has morphed into an entertainment and technology company. 

"Facebook has captured unmatched knowledge of the world’s consumers but the next leg of growth, and stock appreciation, in our view, depends on the company’s ability to deepen its relationship with its nearly 3 billion users," analyst Brad Erickson said. The investment firm says Facebook has created one of the most valuable ad franchises in the world. RBC estimates the global addressable advertising market of $478 billion. 

TheStreet Quant Ratings rates Facebook as a Buy with a rating score of A.

Apple Sees iPhone 13 Delays

Buyers of Apple's iPhone 13 reportedly will endure delays, as the pandemic is stalling production of camera components for the phone in Vietnam. The news came from Nikkei Asia, which cited knowledgeable sources. "Assemblers can still produce the new iPhones, but there's a supply gap [in] that the inventories of the camera modules are running low," one of the sources said. The waiting time for an iPhone 13 Pro Sierra Blue with 512 gigabytes of storage now total up to five weeks in China, five weeks in Japan, and four weeks in the U.S., according to Apple’s website.

Gene Munster from Loup Ventures, a well-known money manager who follows Apple stock closely, recently offered his bullish take on the Cupertino-based company.

TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.

Get more trading strategies and investing insights from the contributors on Real Money.

Amazon Shares Slide, But Analyst Outlook Remains Positive

Amazon stock hasn't been strong as of late. Shares of the cloud and e-commerce giant are down nearly 15% from the top reached in early July. Amazon shares were down 3% on Monday, October 4, which is a sizable dip considering the stock’s daily volatility.

Despite a wide range of price targets on Amazon stock, not a single analyst supports a sell or a hold — consensus is a strong buy. Today, the Amazon Maven debates why Amazon has not reached its peak yet, despite broad-based bullishness.

TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B.

Alphabet's YouTube to Remove Accounts Criticizing COVID-19 Vaccines

YouTube, the streaming video arm of parent Alphabet, announced that it is censoring videos that feature "medical misinformation" and has begun removing accounts of content makers who have criticized COVID-19 vaccines. Alphabet has removed over 130,000 videos for violating YouTube's COVID-19 vaccine policies since 2020.

YouTube says it has worked closely with health authorities to balance its commitment to an open platform with its need to make sure medical misinformation doesn't live on YouTube. Parent Alphabet was expanding its medical misinformation policies on currently administered vaccines that are approved and confirmed to be safe by local health authorities and the World Health Organization. 

"At the onset of COVID-19, we built on these policies when the pandemic hit, and worked with experts to develop 10 new policies around COVID-19 and medical misinformation," YouTube said in its official blog

TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.

Netflix Buys Video Game Creator Night School Studio

Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report shares rose this past week after the streaming giant said it bought videogame creator Night School Studio and launched five mobile gaming titles in select European markets. Terms weren't disclosed. Night School Studio, Glendale, Calif., is Netflix's first gaming-studio purchase. Founded in 2014, Night School is best known for its debut game, "Oxenfree." The studio's games are available on the three major gaming platforms: Sony's  (SONY) - Get SONY GROUP CORPORATION SPONSORED ADR Report PlayStation, Microsoft's  (MSFT) - Get Microsoft Corporation (MSFT) Report Xbox, Nintendo  (NTDOY)  Switch as well as PCs. 

"We’re in the early stages of creating a great gaming experience for our members around the world," Mike Verdu, vice president of game development for Netflix, Los Gatos, Calif., said in a statement. Netflix says the games will be included as part of a Netflix membership with no ads and no in-app purchases. 

The Street Quant Ratings rates Netflix as a Buy with a rating score of B.

Microsoft Increased Its Quarterly Dividend

Software giant Microsoft increased its quarterly dividend by 11% recently, which sounded like a large boon for investors. The catch is that the company’s current dividend is not high compared to other stocks since it used to pay only $0.56. An increase of $0.06 yields an 11% increase and now Microsoft pays $0.62 per share for a forward yield of 0.83%. The company is also conducting a new share repurchase authorization for a maximum of $60 billion in common stock.

Microsoft reports its fiscal first-quarter financial performance in October. The Wall Street earnings per share (EPS) estimates are $2.07 on revenue of $44 billion. This would amount to earnings growth of 13.7% and revenue growth of 23.2%.

The Street Quant Ratings rates Microsoft as a Buy with a rating score of A.

Zoom Video Communications Shareholders Voted to Reject Five9 $14.7 Billion Takeover Bid

Zoom Video Communications  (ZM) - Get Zoom Video Communications (ZM) Report edged higher this past week after shareholders of call center software group Five9  (FIVN) - Get Five9 Inc. Report voted to reject its $14.7 billion takeover bid. The deal, Zoom's largest-ever, would have transformed its platform offering and added a new dimension for investors worried that its popularity would wane as workers and students return to offices and schools in wake of the coronavirus pandemic.

However, the ongoing slide in Zoom's share price made the all-stock deal far less attractive to Five9 shareholders, given that it implied a bid price of $200.28 in early July, but only a $144.70 price when the vote took place last night. Five9 investors were also advised to reject the deal by proxy advisor group Institutional Shareholder Services.

The Street Quant Ratings rates Zoom Video Communications as a Sell with a rating score of D+.