Similarly to its FAANG peers, Meta Platforms (NASDAQ:FB) stock has reversed some of its gains amid the recent selling in the market. The FB stock price chart shows a 17% decline from its 52-week high of $384.33, while it is down about 6% this year.
A confluence of factors hurting advertising spending, including Apple’s (NASDAQ:AAPL) iOS14 changes and deceleration in e-commerce growth, limits the upside in FB stock.
During the Q3 conference call, Meta Platforms’ COO Sheryl Sandberg stated that the company’s Q3 financials took a hit from iOS14 changes. Under Apple’s App Tracking Transparency framework, unless a user enables tracking, regular apps will no longer be able to share data for targeted ads.
Sandberg noted that this lowered Meta Platform’s ad targeting and increased the “cost of driving outcomes” for its advertisers. Moreover, these changes made measuring the outcomes more difficult.
Besides for iOS changes, slowing e-commerce growth and supply chain challenges negatively impacted advertising spend, and in turn, its operating performance.
Now What?
Monness analyst Brian White stated that Apple’s App Tracking Transparency framework could remain a “headwind” for Meta Platforms. However, he maintained a Buy rating on FB stock and stated that it “represents an attractive value for a company so entrenched in the digital ad trend and well positioned for long term, digital transformation opportunities (e.g., metaverse).”
Along with White, Doug Anmuth of J.P. Morgan also reiterated his Buy rating on FB stock as he sees the company progressing well against Apple’s new framework. Further, he remains upbeat over the prospects of Reels.
Reels is the primary driver for engagement growth on Meta’s Instagram, according to management.
While Anmuth is bullish about FB stock, he lowered his price target to reflect difficult year-over-year comparisons and an expected deceleration in revenue growth rate in 2022.
Wall Street’s Take
Most analysts are optimistic about Meta Platforms stock. Its Strong Buy consensus rating is based on 26 Buys and 5 Holds. Further, Further, FB’s stock prediction on TipRanks shows decent upside potential. The average Meta Platforms price target of $406.75 implies 27.9% upside potential to current levels.
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