By Senad Karaahmetovic
Needham & Company analysts reiterated an Underperform rating on Meta Platforms (NASDAQ:META) and lowered FY23 estimates for the internet behemoth.
The analysts now expect Meta to generate $118.9 billion in 2023 revenue and adjusted EPS of $7.57. The new revenue projection calls for 4% revenue growth year-over-year (YoY) and represents a 5% cut relative to prior estimates.
They highlighted their top 5 worries as far as Meta is concerned:
- FCF & EPS underdelivery tied to higher spending on the metaverse, and/or weak ad revs owing to economy, TikTok, etc;
- Whether META has a core business once a competitor (like TikTok) steals away key content creators who aggregate younger demos and millions of viewing hours and ad units;
- Large screen advtg units are taking share from mobile advtg, and META has no CTV strategy;
- Apple's (NASDAQ:AAPL) deprecation of IDFA destroyed META's best-in-class feedback loops on iOS devices, and today RMNs (retail media networks) have better closed-loop attribution, which undermines META's pricing power; and,
- Social spaces in video games have replaced social networks, for certain demos.
However, the analyst admits she could be wrong if U.S. regulators ban TikTok. Media reported yesterday that TikTok has stepped up its efforts to convince the U.S. government to allow it to remain under the ownership of Chinese technology company ByteDance.
Meta Platforms stock closed at $117.12 yesterday and is down about 64% year-to-date (YTD).