One of the rare Wall Street analysts who is bearish on Meta Platforms further cut his price target for the stock, saying the Facebook parent company is "starting to look vulnerable to a growth slowdown."
BNP Paribas Exane analyst Stefan Slowinksi cut his price target for Meta stock to 448 from a previous 505 in a client note late Tuesday. He also reiterated an underperform call for shares of the $1.3 trillion social-media giant. Slowinski initiated coverage of Meta with the sell-equivalent call nearly 12 months ago. He is one of just two analysts out of 74 following the stock to hold a sell or equivalent call, according to FactSet.
"We believe investor sentiment could sour over the coming quarters as it becomes increasingly evident that Meta's recent growth was aided by several unique tailwinds," Slowinski wrote. "We note Reality Labs has amassed nearly $70 billion of cumulative operating losses and the company is now also investing heavily into Gen AI infrastructure and with no clear monetization path."
On the stock market today, Meta stock fell 3.7% to close at 502.31, as tech stocks fell broadly. Meta stock is down more than 12% year to date, compared with its 194% surge in 2023 and 65% gain last year.
Will Tariffs Shift Meta's Narrative?
Reality Labs is Meta's metaverse-focused division. Chief Executive Mark Zuckerberg has committed to spending billions on Reality Labs at the same time the company is investing significantly in data centers to power Meta's generative AI products.
Strong advertising revenue growth, AI excitement and Meta's 2023 "Year Of Efficiency" has helped investors overlook concerns about that spending.
But Slowinski said "the escalating U.S./China trade war presents further risks to growth, threatening to shift the narrative back towards profitability as management re-enters another heavy investment phase."
A similar dynamic sank Meta's stock in 2022. Meta's ad sales took a hit that year after privacy changes for iPhone users by Apple that made it harder to target ads. Slowing sales brought greater scrutiny to Zuckerberg's metaverse spending.
Meta's sales bounced back the next year and fueled its huge rally through 2024. But, in Slowinski's view, that growth was helped by "one-time tailwinds." Those tailwinds include Facebook and Instagram ad sales bouncing back from Apple's privacy chances, improved monetization of short-videos on Meta's Reels offering, and demand from China advertisers such as Temu.
Further, he says Meta still does not have a clear monetization plan for its big AI spending. The BNP Paribas Exane analyst sees risks for further cuts to Meta's revenue and earnings estimates on Wall Street.
Wall Street Lowers Meta Stock Price Targets
Meta stock still has a buy or equivalent rating from 88% of analysts following the stock. But Wall Street has been lowering its targets for the tech giant.
The average target price for Meta stock among analysts is 727.92, according to FactSet. That's down about 5% from February.
Meanwhile, an FTC antitrust trial that could require Meta to sell Instagram or WhatsApp kicked off on Monday.
Meta will report first-quarter earnings on April 30.
