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On Monday, Cantor Fitzgerald analyst Deepak Mathivanan maintained an Overweight rating on Meta Platforms Inc. (NASDAQ:META) with a price target of $624.00. Meta, currently valued at $1.27 trillion, maintains impressive gross profit margins of 81.68% and trades at a P/E ratio of 20.37. According to InvestingPro analysis, the stock is currently fairly valued based on its comprehensive Fair Value model. The reaffirmation comes as the Federal Trade Commission’s (FTC) antitrust trial against Meta, concerning its acquisitions of Instagram (IG) and WhatsApp (WA), commenced this week. The trial opened with Meta’s CEO testifying and the FTC honing in on the company’s motives for acquiring Instagram.
The FTC’s case is reportedly centered on a limited definition of Personal Social Networking Services (PSNS), identifying only SNAP and MeWe as Meta’s direct competitors, with Meta commanding an over 85% market share in this space. InvestingPro data confirms Meta’s dominant position, with the company achieving a 21.94% revenue growth in the last twelve months and maintaining strong financial health with an overall score of "GREAT." Despite the ongoing legal proceedings, the analyst expressed the view that the likelihood of enforced divestitures remains low, though the trial offers insights into the FTC’s legal approach.
During the trial, Meta’s defense presented slides revealing several aspects of its business operations. Notably, the percentage of time users spend viewing content from friends on Facebook and Instagram has been declining, now standing at 17% and 7%, respectively. This trend is attributed to the company’s use of AI-driven recommendations, as also reflected in Meta’s transparency reports. Additionally, a temporary TikTok ban resulted in a short-term spike in Facebook and Instagram usage, increasing by 17-20% for a few hours. Furthermore, the data showed that video time spent on Facebook in the U.S. has surpassed 50%, with a recent acceleration in the shift towards video content.
The analyst’s commentary and the maintained price target suggest confidence in Meta’s stock amidst the backdrop of the high-profile legal battle with the FTC. The ongoing trial is expected to continue shedding light on Meta’s business practices and the competitive landscape of social networking services. InvestingPro subscribers can access 12 additional key insights about Meta’s financial health, valuation metrics, and growth prospects through the comprehensive Pro Research Report, providing deeper analysis for informed investment decisions.
In other recent news, Meta Platforms Inc. has been the subject of multiple analyst revisions and market evaluations. Truist Securities has adjusted its price target for Meta to $700, down from $770, while maintaining a Buy rating. This change comes as Meta is expected to report first-quarter revenue of $41.7 billion, reflecting a 14% year-over-year increase, though future growth estimates have been lowered due to tariff impacts. Similarly, Cantor Fitzgerald reduced its price target to $624 from $790, citing tariff exposure and economic slowdowns as key factors influencing Meta’s financial outlook. Despite these challenges, Cantor Fitzgerald maintains an Overweight rating on the stock, highlighting Meta’s advertising effectiveness and potential for AI-driven growth.
Scotiabank (TSX:BNS) also revised its price target for Meta, decreasing it to $525 from $627, while keeping a Sector Perform rating. This adjustment reflects concerns over reduced advertising spending by Chinese companies and ongoing regulatory scrutiny. Mizuho (NYSE:MFG) has pointed out that Chinese advertisers have cut their spending amid a tariff war, and competitive pressures from companies like OpenAI are also being monitored. Additionally, Meta’s proposed $450 million settlement with the Federal Trade Commission is significantly lower than the initial $30 billion demand, amidst ongoing regulatory challenges. These developments provide a comprehensive view of the factors currently influencing Meta’s market position and investor sentiment.
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