Meta Platforms (META) is well-positioned to withstand a slowdown in online advertising should the U.S. economy fall into a recession, says Citigroup (C).
In addition to import tariffs and a trade war with China, technology stocks also face risks from a potential slowdown in advertising spending. Many technology companies, including Alphabet (GOOGL) and Meta, get the majority of their revenue from online ad spending.
Among ad-dependent technology companies, Meta Platforms is better positioned than most to
weather a downturn should companies tighten their purse strings in the event of an economic recession. Ronald Josey, a top five-star rated analyst at Citigroup, wrote in a note to clients that reciprocal tariffs are “likely to impact eCommerce and online advertising budgets.”
Top Internet Pick
Josey added that, despite the potential risks, Meta Platforms remains Citigroup’s “top internet pick.” This is because Meta’s family of apps, which include Instagram and Facebook, would be among the last platforms to experience a slowdown in advertising spending should a recession hit.
With its huge number of daily users, Meta has one of the highest advertisement engagements on the internet, notes the analyst. Despite his optimism, Josey lowered his price target on META stock to $655 from $780. However, he dropped his price targets on several other ad-driven technology stocks even more, including Reddit (RDDT), Pinterest (PINS), and Snap (SNAP).
META stock has declined 11% this year.
Is META Stock a Buy?
The stock of Meta Platforms has a consensus Strong Buy rating among 46 Wall Street analysts. That rating is based on 42 Buy, three Hold, and one Sell recommendations issued in the past three months. The average META price target of $726.35 implies 39.35% upside from current levels.
