JPMorgan downgraded shares of Facebook-parent Meta Platforms after a disappointing quarterly report. The social media company, which recently shifted focus to the metaverse, posted weaker-than-expected earnings and missed Wall Street estimates on guidance for the first quarter. "FB is seeing a significant slowdown in advertising growth while embarking on an expensive, uncertain, multi-year transition to the Metaverse," JPMorgan's Doug Anmuth said in a note Thursday. JPMorgan lowered its rating on Meta to neutral from overweight and removed the stock from its analyst focus list. The firm also slashed its price target on Meta to $284 from $385. The new projection implies 12.7% downside from Meta's closing price Wednesday. Facebook blamed the earnings miss on privacy changes to Apple's iOS, competition from newer social media platforms like TikTok and people spending more time on less-lucrative features like its Reels videos. "Tough comps, macro, & FX are certainly part of the N-T story, but TikTok competition & the Apple iOS changes will both have a bigger impact than expected in 2022, & stronger engagement in Reels is cannibalistic to monetization in the near term," Anmuth said. JPMorgan believes year-over-year comparisons for Meta will only get harder in the second quarter. "For now, we move to the sidelines as we believe shares will be under pressure or range-bound in coming months," Anmuth said. Meta shares were down more than 22% in the premarket Thursday. The stock is off 4% this year after a 23.1% gain in 2021. —CNBC's Michael Bloom contributed reporting.
Investors are staying on the sidelines amid a broad selloff in tech stocks this year. Shares of Facebook parent Meta are down more than 30% this year amid a troubling macro environment and weaker-than-expected results.
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