The weak first-quarter report from Facebook parent Meta was similar to another earnings report almost four years ago, and that should reassure investors about the stock's ability to bounce back, according to some top Wall Street analysts. Shares of Meta were down more than 20% in premarket trading to around $253 on Thursday after the company's fourth-quarter report revealed worse-than-expected results for earnings and user growth as well as forward sales guidance. However, Wall Street analysts and major firms were largely standing by the stock after the report. Many lowered their price targets but pointed to a similar issue a few years ago for the company then known as Facebook that suggested a rebound in the second half of 2022. "We have witnessed this happen back in 2Q18 as FB transitioned from Feed to Stories. ... Revenue growth decelerated for three quarters before re-accelerating again. FB was able to close the gap between by increasing ad load and implementing [direct response] features," Mizuho's James Lee said in a note to clients Wednesday night. Lee cut his price target to $425 from $450. Facebook saw a similarly large drop after an earnings report on July 26, 2018 . The stock fell nearly 19% that day, but recovered most of that loss over the following year. The 2018 decline coincided with a shift toward Facebook and Instagram stories, similar to the recent emphasis on shorter Reels videos that are a more direct competitor with TikTok. "We all remember the 2018 Stories transition and guide down," Morgan Stanley's Brian Nowak said in a note. "But that experience (along with the mobile transition before that) are examples of FB's ability to innovate and monetize new forms of engagement … as FB started to meaningfully monetize Stories within 6-9 months. This gives us confidence that over the long-term FB will be able monetize Reels." Nowak cut his price target on the stock to $360 per share from $395. Goldman's Eric Sheridan also drew comparisons with 2018 in maintaining his bullish outlook on the stock. "With a more compelling valuation reset post this selloff and recent underperformance and (despite industry headwinds) an established role in global digital advertising budget allocations, we remain Buy rated on the shares but lower our PT from $445 to $355." Elsewhere, BMO Capital Markets did downgrade Meta to market perform, but its $290 price target was well above where the stock was trading premarket. JPMorgan also downgraded the stock. — CNBC's Michael Bloom contributed to this report.
A tarp with the Facebook thumbs-up logo covers the sign in front of the Facebook headquarters on October 28, 2021 in Menlo Park, California.
Justin Sullivan | Getty Images
The weak first-quarter report from Facebook parent Meta was similar to another earnings report almost four years ago, and that should reassure investors about the stock's ability to bounce back, according to some top Wall Street analysts.