Meta Platforms Inc (NASDAQ:FB) has an advertising problem "getting worse, not better" as Benchmark initiated coverage on the Mark Zuckerberg-led company.
Analyst Mark Zgutowicz started coverage with a Hold without a price target, noting that while Apple Inc's (NASDAQ:AAPL) iOS changes have put an obvious hamper on Meta's advertising targeting capabilities, it looks like engagement on Facebook and Instagram "may finally have cracked" and the company's newest product, Reels, will not be able to carry both platforms.
Meta's biggest competitor is ByteDance's TikTok leads in engagement over Reels because it prioritizes the content and it's a simple platform for creators, while Reels has fallen behind due to "more restrictive algorithms that tap big names and curated content."
In addition, metaverse spending is "fast and furious," Zgutowicz explained while pointing out that there is no line of sight on long-term returns, with estimates of accumulated losses of "at least $60 billion" since 2019.
Price Action: FB shares traded lower by 0.30% at $210.40 in the premarket on the last check Tuesday.
Photo by JD Lasica via Wikimedia
