Morgan Stanley lowers Meta’s price target to $225

Yahoo Finance Live anchors discuss Morgan Stanley slashing Meta’s price target to $225 from $280 amid lower engagement and monetization.

Video transcript

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JULIE HYMAN: We got some Calls of the Day for you right now. Let's start with Meta. Morgan Stanley slashing its price target for the Facebook parent company from $280 to $225. It is, however, keeping its overweight rating. Obviously, neither one of those price targets is above where it is right now.

But they are warning of declining user engagement on the platform and talking a lot about Reels. That Reels is a lower monetizing business. And the engagement there is lower monetizing as well. And that's one of the things that is causing this lower price target.

BRIAN SOZZI: Yeah, nothing new here, per se. A lot of, I think, some of these concerns we've heard coming on Meta for some time now, especially after the most recent earnings call, also comes an interesting time when big cap tech has rallied here, perhaps gotten detached from some of the near-term fundamentals in these businesses. But again, Meta under fire.

JULIE HYMAN: Yeah, Meta under fire. And Meta, even though it has recovered from the lows, Meta among the largest cap tech. I think is still the worst performer for the year-to-date. It's definitely-- you know, if you're looking at that year-to-date-- that's the weekly performance. But if you look at year-to-date, it's still down almost 50%. So the bounce off the low, I mean, it's not-- that's not much of a bounce if you look at that chart.

BRIAN SOZZI: For as long as, you know, TikTok just has this rabid following, it's a nightmare scenario for a company like Meta. It's a nightmare.

JULIE HYMAN: Well, and you not only have the competition, you also have the slowing macro environment, of course. So you know, Reels-- you got Reels trying to compete with TikTok. You have ad sales slowing. You got the Apple tracking changes. It's all piled up.