Meta shares collapsed by 14%. Immediately two analysts stopped advising to buy them
Meta shares fell by almost 14% at the beginning of trading on October 30, hitting a five-month low. If the dynamics continues, Thursday may become the worst day for the company's quotes in three years. In reports published the day before, Ma said that its capital expenditures next year will be "noticeably higher" than in 2025, and total expenditures will grow at a "significantly higher rate" than in the current year. This alerted not only investors, but also analysts: at once two investment banks - Oppenheimer and Benchmark - stopped recommending buying Meta shares and several others lowered their target price, writes CNBC. What do analysts advise investors to do now?
- Oppenheimer on October 30 changed its recommendation on Meta shares from "buy" (Outperform rating) to "hold" (Market Perform) and canceled its previous price target of $696. The bank's analysts noted that Meta's heavy investment in AI development with no clear revenue prospects resembles spending on meta-universe in 2021-2022. Investors will find it difficult to justify the company's current valuation because aggressive revenue growth is accompanied by too high costs, Oppenheimer wrote.
- Benchmark also stopped advising to buy Meta shares, downgrading them from Buy to Hold. The bank said Meta's quotes are likely to remain in a narrow range until the company can justify the effectiveness of its rapidly growing capital expenditures. Analysts noted that Meta is actively investing in AI areas outside of advertising, including robotics projects and the development of its Llama lineup, but the potential return on those investments remains uncertain amid increasing competition from OpenAI, Google, Tesla and other advanced AI labs.
- Barclays maintained its recommendation to buy Meta shares (Overweight rating), but lowered the target price from $810 to $770. The new target is only 2.4% above the closing price on October 29. The bank noted that Meta's strong results (the company reported its strongest revenue growth rate since Q1 2024) were overshadowed by increased investment, especially in AI. "While not a surprise and likely to deliver good long-term results, these costs negate most of the expected 2026 operating profit growth and almost all of the free cash flow," Barclays analysts said.
- Citi also reaffirmed its Buy rating, while lowering the target price from $915 to $850. According to the bank, the securities have upside potential of 13% from the last closing price. "We believe Ma has a proven track record of successful investments that have resulted in increased user engagement and advertising revenue. While new uncertainties may emerge in 2026, we see several strong product and monetization drivers that have the potential to drive further sustainable growth for the company," Citi said.
- In total, Meta is tracked by more than 70 analysts, and about 75% of them advise investors to buy the stock (Buy and Overweight ratings), MarketWatch shows. Right now, only one analyst on Wall Street has a sell recommendation on Meta shares. The average target price of $869 suggests a potential upside of 16% from the last closing price.
This article was AI-translated and verified by a human editor
