What Does Q1 Hold for Meta Platforms?

Meta Platforms (NASDAQ:FB) announced that it would report its Q1 financials after the market closes on April 27. However, given the ongoing headwinds, Q1 results could remain challenged. 

For context, the company is struggling to add daily active users amid an increasingly competitive environment. Meanwhile, Apple’s (NASDAQ:AAPL) iOS privacy changes took a toll on its top line. Moreover, the slowdown in e-commerce growth, labor shortages, and supply-chain constraints adversely impacted ad spending and Meta’s financials. 

Now What?

Jefferies analyst Brent Thill recently held a call with an ad agency expert. Providing takeaways from the call, Thill stated that the expert sees ongoing supply-chain disruptions and rising inflation negatively impacting ad spending in 2022. 

The expert pointed to Meta’s “poor video content offering, slowing audience growth, and large reliance on IDFA (Identifier for Advertisers) retargeting” as weaknesses. However, he added, “Unless AAPL introduces more restrictive privacy measures, our expert believes the worst of the
iOS impacts are behind FB.”

Notably, during the Q4 conference call, Meta’s management stated that Apple’s iOS privacy changes could have a $10 billion impact on its business in 2022.

Further, citing macro headwinds, competition, and iOS changes, the company projected Q1 revenues to be in the range of $27-29 billion, which fell short of the Street’s consensus estimate of $30.15 billion. 

Irrespective of near-term challenges, Thill has a Buy recommendation on FB stock. Along with Thill, Monness analyst Brian White is also bullish on Meta Platforms.

In a note to investors, White wrote, “Despite a rough start to 2022, we believe Meta will continue to benefit from the long-term digital ad trend, participate in accelerated digital transformation, and innovate in the metaverse; however, we expect advertising headwinds and regulatory scrutiny to continue.”

Bottom Line 

Macro headwinds, increased competition, and Apple’s privacy changes will likely hurt Meta’s near-term financials. Given the challenges, Wall Street is cautiously optimistic about FB stock. On TipRanks, Meta Platforms stock has received 32 Buy and 13 Hold recommendations for a Moderate Buy consensus rating. 

FB’s stock price forecast on TipRanks shows decent upside potential. The average Meta Platforms price target of $325.10 implies 39% upside potential to current levels.

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