Meta Platforms reported fundamentals still deteriorating, says Needham

Needham analyst Laura Martin keeps an Underperform rating on Meta Platforms, noting that while the company’s verbal focus on efficiency in 2023 is a positive, its reported fundamentals are still deteriorating. Q1 guidance calls for negative growth in revenue for the 4th quarter in a row, its ad CPMs were down 22% y/y, and the company also stated that its Reels product is cannibalizing engagement time from its higher-monetization surfaces, the analyst tells investors in a research note. The firm further raises a question whether Meta has a "terminal value" as Myspace had become "essentially worthless" after being replaced by Facebook, adding that Meta’s worth may only be the present value of its free cash flows, which were cut in half in Q4 and in 2022.