Meta Platforms sinks as BofA downgrades on worries over elevated advert spend strain

Meta Platforms (NASDAQ:META) fell on Monday as Financial institution of America downgraded the tech big on worries over elevated strain on promoting spending.

Analyst Justin Put up moved his score on Meta (META) to impartial from purchase noting that checks into the soundness of advert income indicated an in-line quarter. Nonetheless, considerations over price range cuts subsequent yr and the weak point seen in Snap’s (SNAP) revenues might weigh on sentiment.

“Whereas [fourth quarter] & 2023 expectations have been lowered, we anticipate advertiser price range cuts in early 2023 to weigh on sentiment and drive added uncertainty on post-IDFA adjustments and Reels transition,” Put up wrote in a be aware to shoppers. The analyst additionally lowered his value goal on Meta (META) to $150 from $190.

The analyst added that 2023 income progress is anticipated to be simply 4% year-over-year to $120B, nicely beneath the $127B that Wall Road is anticipating, with the potential for “draw back threat to our estimates in a recession.”

Meta Platforms (META) dipped barely greater than 1% to $128.50 in premarket buying and selling.

As well as, Put up mentioned there’s a extra cautious perspective in direction of consumption on Reels, particularly in gentle of “declining content material consumption” on Snap (SNAP).

“With whole [Facebook and Instagram year-over-year] time spent was secure to barely down per SensorTower in [the third-quarter], Reels utilization ramp will not be proving to be incremental, and time spent is probably going down on extra precious social content material, in our view,” Put up added.

Trying to the third-quarter, Put up expects Meta (META) to report income in-line with estimates at $27.43B. There’s the potential for EBITDA to return in above expectations because of continued value cuts.

Final week, Citi mentioned Meta Platforms (META) stays one of many agency’s high picks within the web house going into third-quarter earnings because of a “compelling” risk-reward alternative at present ranges.

Analysts are largely optimistic on Meta Platforms (META). It has a BUY score from Searching for Alpha authors, whereas Wall Road analysts fee it a BUY. Conversely, Searching for Alpha’s quant system, which persistently beats the market, charges META a HOLD.