Facebook shares are prone to keep within the penalty field for a while within the wake of a lackluster fourth quarter and even worse 2022 outlook as Apple privateness adjustments and a surging TikTok take their collective toll on earnings.
“Shares are in all probability lifeless cash at this stage of progress for at the very least the subsequent three months,” stated high tech analyst Mark Mahaney of EvercoreISI on Yahoo Finance Live.
Meta shares have been rocked to the tune of 25% on Thursday’s session, and rightfully so most analysts stated.
Facebook added simply 2 million month-to-month lively customers within the quarter, barely shifting the needle from the prior quarter. In the third quarter, the platform added 15 million month-to-month lively customers.
Daily lively customers fell by 1 million. The firm missed analyst revenue estimates by a whopping 14 cents.
Other pink flags from the fourth quarter included:
Operating revenue margins within the Family of Apps phase declined 600 foundation factors from the prior yr.
Ad impressions dropped 6% year-over-year in North America.
Price per advert rose 6% year-over-year, slowing from 22% progress within the third quarter.
Despite the brutal market response Thursday, most analysts got here out in protection of Facebook’s inventory. Price targets have been slashed by nearly all of main Wall Street retailers, however Outperform rankings have been left intact.
Mahaney is in that group of Facbeook bulls, reiterating an Outperform ranking however slicing the worth goal to $350 from $430.
“Facebook is now buying and selling inside 1-2 price-to-earnings turns of its trough 2018 a number of (approx. 17 occasions), which we imagine means there may be restricted draw back from right here. We imagine the Q1 income progress deceleration information (7-8 proportion factors on the excessive finish on a 12 proportion level more durable comp) suggests a stabilization in income traits. We imagine the primary three components highlighted above are addressable — we’ve confidence that Facebook and the advert ecosystem will develop an appropriate substitute for IDFA over time, that Facebook will reach its transition to Reels, simply because it did with Stories, and that its macro challenges are non permanent,” Mahaney wrote in detailed notice to shoppers he shared with Yahoo Finance.
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The broadly adopted analyst believes Facebook might return to twenty% income progress and 30% earnings progress by the tip of 2022.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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