Bank of America cut price targets for Meta stock, Alphabet, Reddit, Pinterest and Snap, citing a projected decline in digital advertising spending. BofA also lowered its 2025 online advertising spending estimates by about $21 billion total, representing a 4% decrease.
"Our recent channel checks (conducted in mid-March) suggested potential ad spending risk from negative headlines (U.S. Small Business optimism down in March), and given the latest tariff announcements, we think pressure on ad spend will materialize," BofA analyst Justin Post said in a Wednesday client note.
However, President Donald Trump at least temporarily reversed course on part of his tariff plan Wednesday. He announced on Truth Social that he would enact a 90-day pause on reciprocal tariffs for most countries, except for China. At the same time, he raised U.S. tariffs on China goods to 125%. The change caused the S&P 500 to leap 9.5%, with social media stocks rallying.
Prior to that announcement, Post wrote that the tariff situation "remains fluid" but the analyst rolled back expectations for overall ad spending. BofA expects advertisers will reduce brand-awareness spending by 15% to 20% and their direct-response ad budgets by 4% to 5%. Direct-response refers to ads designed to elicit an action, such as clicking onto a product page to make a purchase.
Post lowered BofA's price objective for Meta stock by 16%, to 640 from 765. Google's price target was cut to 185, down 18% from 225. Pinterest was lowered 24%, to 35 from 46. Snap was cut to 10.50 from 14.50, a 24% decrease. Reddit got the steepest cut. Its price target from BofA was lowered 42%, to 110 from a previous 190.
BofA reiterated buy calls on Meta, Google and Pinterest while it remained neutral on Snap and Reddit stock.
Meta Revenue Expectations Lowered
The price target changes reflect lowered revenue and adjusted earnings estimates for each company, given their reliance on digital advertising.
However, Meta and Google have advantages through "deeper ad auctions, a higher mix of direct-response revenues and a 2-3% foreign-exchange benefit," the note said.
BofA lowered its expectations for Meta's 2025 revenue by 4.4% and Google's 2025 revenue by 3.7%. Meanwhile, BofA cut its estimates for Reddit's 2025 revenue by 6%, Snap by 5.9% and Pinterest by 5.8%.
The new BofA note echoed other Wall Street commentary during the tumult triggered by President Donald Trump's tariff announcements last week. Forecasters generally expect advertising spending to slow. But the largest online ad platforms in Google, Meta and Amazon will likely retain their advantages, analysts say.
There is a "strong correlation between online advertising industry spend and GDP," BofA's Post wrote Wednesday. "Higher tariffs on imports seem likely to drive up inflation, lower advertiser sales expectations, and drive a pullback in brand ad spending, in our view."
While still forecasting upside, Wall Street is adjusting its expectations for Meta stock after its big 2023 and 2024 rally. The average price target among the 74 analysts following the stock is 749.49, according to FactSet. That's down from 762.80 in February.
Meta Stock Bounces Back On Tariff Shift
Meta stock gained 15% to close at 585.77 on the stock market today. That brought Meta stock back to near where it closed on April 2, before Trump's "Liberation Day" tariff plan announcement roiled markets later that day. The stock closed above its 21-day moving average for the first time since March 25.
Meta stock is now roughly even year-to-date. That's despite a record 20-day winning streak for Meta from late January until Feb. 14. Shares peaked with a Valentine's Day high of 740.91. Since then, Meta shares have given back 21%.
Google stock, meanwhile, rallied 9% to 158.71 on Wednesday, also returning to its pre-Liberation Day levels. The tech giant is also hosting a conference for its cloud business today. Shares of the search giant are down 16% this year.
Reddit stock rocketed 24.7% higher following the tariff pause to close at 110.86, also erasing its slide in the trading days since April 2. Shares are down 32% this year after Reddit's huge post-IPO run in 2024.
Snap stock added 22% to close at 8.82. Pinterest shares jumped 14% to 28.14.
