Meta Faces Uphill Battle Against TikTok, Analyst Points to Margin Headwinds and Valuation Pressure
Portfolio Pulse from Anusuya Lahiri
Needham analyst Laura Martin reiterated an Underperform rating for Meta Platforms Inc (NASDAQ:META), citing challenges from TikTok. Martin suggests that Meta's efforts to regain creators, users, and advertisers from TikTok could lead to lower ROICs and EBITDA margins. She also pointed out that TikTok's normalized margins at maturity are 30%-50% below Meta's historical EBITDA margins. Additionally, Meta's valuation has dropped to 3.4x FY24 revenue due to its Metaverse aspirations and market share losses to TikTok.
August 04, 2023 | 11:52 am
News sentiment analysis
Sort by:
Descending
NEGATIVE IMPACT
Meta Platforms Inc faces challenges from TikTok, which could lead to lower ROICs and EBITDA margins. The company's valuation has also dropped due to its Metaverse aspirations and market share losses to TikTok.
The analyst's Underperform rating and the potential for lower margins due to competition with TikTok could negatively impact Meta's stock price. Additionally, the company's decreased valuation could also put pressure on the stock.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100