In the short run, Wall Street analysts expect TikTok and Apple Inc’s (AAPL.O) privacy improvements to be a concern for Facebook-owner Meta Platforms Inc (META.O).
At least ten brokerages reduced their Meta price targets after the firm posted its first-ever quarterly revenue loss on Wednesday, underlining the hurdles that U.S. corporations face from a higher dollar and concerns about an oncoming recession.
Before the bell, shares of the business, which also owns Whatsapp, were trading at $161.65, adding to its year-to-date losses of 50%.
Apple upended the digital advertising business last year when it imposed new iPhone privacy rules that made it difficult for companies like Meta and Snap Inc (SNAP.N) to target and measure ads on their applications.
According to analysts, that, coupled with TikTok’s growth, is exacerbating recessionary fears.
“Tough comps, macro, and FX are certainly part of the near-term story, but TikTok competition and Apple iOS changes will both have a bigger impact than expected in 2022,” J.P. Morgan analysts said.
According to company officials, Reels, a short video product that Meta is rapidly integrating into users’ feeds to compete with TikTok, cannibalizes more good content and will be a drag in the quick run before eventually boosting profitability.
Many experts believe Meta will return to better growth in 2023. Still, they have highlighted the stuttering start to its metaverse dream as regulators clamp down on big tech corporations, delaying their innovation goals.
The US Federal Trade Commission also seeks a court injunction to prevent Meta from acquiring virtual reality content within Unlimited.
Hargreaves Lansdown equity analyst Laura Hoy warned of the eventual quagmire of negative sentiment surrounding Meta.
The FTC’s action is “not merely a stumbling block for Zuckerberg’s vision of a digital future, but a shot across the bow for the entire industry,” according to Hoy.
