Shares of Meta Platforms (NASDAQ: FB) recovered about 16% from its recently crafted 52-week low. However, it continues to remain under pressure due to various reasons.
It’s worth noting that the slowdown in its growth, higher competitive activities, Apple’s (NASDAQ: AAPL) privacy changes, and macro headwinds took a toll on Meta stock.
Facebook’s daily active user growth has been moderating on a sequential basis. Meanwhile, it declined on a quarter-over-quarter basis in Q4. Management blamed higher competitive activity for the slowdown.
While increased competition remains a drag, management expects Apple’s privacy changes to have an adverse impact of $10 billion on its top line in 2022.
The recent decline indicates that these negatives are priced in Meta stock. However, BuzzFeed (NASDAQ: BZFD) CEO Jonah Peretti recently stated that audiences are spending lesser time on Facebook, which isn’t favorable news for Meta Platforms’ shareholders.
Notably, BuzzFeed is a digital media company that generates most of its audience traffic from Facebook.
Commenting on BuzzFeed’s Q4 operating performance, its CFO, Felicia DellaFortuna, stated that “time spent declined 4% year-over-year to 186 million hours, reflecting a shift in time spent away from Facebook and onto platforms such as Instagram and TikTok.”
Further, DellaFortuna added that this has “disproportionately impacted” its commerce revenues compared to other businesses. Looking ahead, BuzzFeed sees audiences spending lesser time on Facebook. Thus, it is focusing on lowering its dependence on one platform and is working on diversifying its distribution channels.
Now What?
BuzzFeed’s guidance indicates that Meta Platforms’ problems are here to stay, at least in the foreseeable future.
Owing to the multiple growth concerns (slowdown in growth, competition, Apple’s privacy changes, and shift towards slower-to-monetize short-form videos), Wall Street analysts are cautiously optimistic on Meta stock.
It has received 32 Buys, 13 Holds, and one Sell recommendation for a Moderate Buy consensus rating. Moreover, the average Meta Platforms price target of $325.10 indicates 49.4% upside potential from current levels.
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