It appears that Meta Platforms’ (NASDAQ:META) problems aren’t abating soon, which could limit the recovery in its share price. While increased competition and economic uncertainty have weighed on META stock, the U.K.’s Competition and Markets Authority (CMA) told the social media giant on Tuesday to sell GIPHY, its GIF-sharing platform, which it acquired in 2020.
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The CMA said that META’s acquisition of GIPHY raises competition concerns among social media companies, which would hurt users and advertisers.
Monness analyst Brain White, who is bullish about META’s prospects, highlighted in a recent note that “regulatory headwinds persist” for the company, and he fears that the “darkest days of this downturn are ahead of us.”
Meanwhile, Needham analyst Laura Martin, who is bearish on META stock, stated, “Every week, there seems to be a new negative regulatory headline” for the company. She highlighted that “there is a growing list of FTC complaints in its antitrust case against Meta” with negative consequences.
TipRanks’ data shows that META stock’s legal & regulatory risks account for 21.3% of its total risks. Further, Meta Platforms’ legal & regulatory risks are also higher than the sector average of 18.9%.
Is Meta Stock a Buy, Sell, or Hold?
Meta Platforms stock faces revenue and margin headwinds in the near term. Moreover, regulatory risks are a concern. Given the challenges, analysts are cautiously optimistic about its prospects. It has received 26 Buy, six Hold, and two Sell recommendations for a Moderate Buy consensus rating.
Further, these analysts’ average price target of $207.73 implies 56.4% upside potential.
TipRanks’ data shows that hedge funds used the recent pullback in META stock to acquire more shares. Hedge Funds bought 4.5M META stock in three months. However, insiders sold META shares worth $4M. META scores eight out of 10 on TipRanks’ Smart Scoring system, implying it could outperform the broader market.
