Stock Analysis & Ideas

Will Instagram’s Problems Cause Meta Stock to Drop?

Story Highlights

The Instagram backlash has left some investors wondering what it could mean for Meta stock. The stock has been attempting to recover after a steep fall in 2022. TipRanks’ tools offer a clue as to what might be lying ahead for the stock.

Meta Platforms’ (META) Instagram has run into problems in its bid to counter its Chinese rival TikTok. Meta stock rose 5.4% on August 3, but it has declined more than 50% year-to-date. I believe Instagram issues will not have a significant impact on Meta stock. Keep reading to find out what the Instagram issues are and why TipRanks tools hint at Meta stock upside potential.

The Mark Zuckerberg-led Meta operates several social apps. Apart from Instagram, its other social media brands are Facebook, WhatsApp, and Messenger. The company draws the bulk of its revenue from advertising. It also makes devices that serve as gateways to the metaverse, such as virtual reality headsets.

Instagram Users Refuse to Ape TikTok

Instagram has traditionally been a photo-sharing platform, while TikTok is about videos. TikTok’s videos have become a hit with young social media users, and they have become a threat to Instagram and other Meta apps. 

Instagram recently introduced tweaks where it prioritized video recommendations over photos and posts from friends. The changes sparked a backlash, including from celebrity figures such as Kim Kardashian. Instagram users rejected the app’s attempt to be like its rival TikTok. In the end, Instagram rolled back some of the features that its users objected to.

Is Meta Stock a Good Buy?

Apart from the TikTok disruption that led to changes at Instagram that caused an uproar from users, Meta also struggles with a weak advertising market. The company surprised investors when it reported a revenue drop for Q2 2022. 

Despite the above challenges, Wall Street believes Meta stock deserves a place in your portfolio. Based on 28 Buys, six Holds, and two Sells, the stock has a Moderate Buy consensus rating. Meta stock’s average price target of $226.26 implies 34% upside potential to current levels.

If you’re wondering what elite investors think about the Meta stock, TipRanks data shows that the Hedge Fund Confidence Signal in the stock is Very Positive. In the past three months, 106 hedge funds increased their cumulative holdings of Meta stock by 9.1 million shares.

Moreover, TipRanks shows that financial blogger opinions are 89% Bullish on META, compared to a sector average of 66%.

The concluding analysis through various TipRanks’ tools points towards the fact that Meta stock is bound northwards.

Closing Remarks

Meta has learned that Instagram users want the app to stay the way it has been rather than seek to look like TikTok. The company can use what it has learned to make Instagram better in ways that users will like and prevent them from decamping to rival platforms. In the wake of the backlash over Instagram tweaks, Meta is sending Instagram boss Adam Mosseri to London to assist the teams there. Meta has an Instagram product team in London – its largest international engineering hub.

In the end, it does not seem like the Instagram issue presents a serious setback that could sink the Meta stock.

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