Following 4Q21’s debacle, Meta (FB) investors will be praying to the market gods there will be no repeat when the social media giant reports 1Q22 earnings after the close next Wednesday, April 27.
Recall, the stock shed 26% following the Q4 calamity, erasing around $250 billion of value in a single session after the company warned Apple’s iOS privacy changes and rising competition would impact Q1 with revenue growth anticipated to slow down.
It is exactly those twin aliments which have JMP’s Andrew Boone heeding caution ahead of the print.
On the former, considering the changes in iOS 14.5 (IDFA/ATT), the company has “made progress rebuilding” its targeting and measurement products, but Boone notes the regulatory climate, plus Apple and Google pivoting toward more consumer privacy, likely “creates continued headwinds.”
As such, adjusting to the ongoing consumer privacy landscape, Boone anticipates ad pricing growth will become “more challenged going forward.”
As for the latter, with 1.6 billion MAUs (monthly active users) spending 85 minutes per day on the app, TikTok is probably taking share of time. And the app’s popularity is only growing.
While Boone believes Meta’s social graph is “differentiated and valuable for users,” as more users discover and consume TikTok’s content, the analyst anticipates FB will “continue to lose ‘bored’ and ‘second screen’ time” to TikTok.
As far as the impact on Boone’s model, throughout 2021 ad impression growth slowed down and Boone expects this will subsist in 2022 with revenue growth over the next couple of years coming more from “ad pricing gains.”
These bearish developments, though, are countered by FB’s value proposition. “We continue to view Facebook as a best-in-class digital advertising platform with extensive first-party data, highly performant ad formats, and a highly engaged and scaled user base,” the analyst said.
However, with the expectation of lower revenue, Boone reduces the price target from $350 to $265, suggesting shares have room for 32% growth over the coming year. Boone’s Outperform (i.e., Buy) rating stays as is. (To watch Boone’s track record, click here)
Overall, there are plenty of Facebook bulls amongst Boone's colleagues. FB's Moderate Buy consensus rating is based on 33 Buy reviews, 13 Holds and just a single Sell. The analysts see big gains ahead; going by the $314.95 average price target, the shares will add ~71% over the next 12 months. (See FB stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.