Social media stocks have been in the spotlight lately as they are expected to benefit from the Biden administration’s potential ban on TikTok. Increasing competition from TikTok, Apple’s iOS privacy update (AAPL), and the impact of macroeconomic pressures on ad spend have all had a major impact on social media companies over the past year. Using TipRanks’ stock comparison tool, we compared Meta Platforms (NASDAQ:META), SNAP (NYSE:SNAP) and Bilibili (NASDAQ:BILI) to select the stock that held the Wall’s Strong Buy consensus rating despite short-term pressure street reached .
Meta Platforms (NASDAQ:META)
Meta impressed investors with better-than-expected fourth-quarter earnings. Still, weak advertising spending continues to weigh on the company’s revenue, which fell for the third straight quarter.
Meta is taking several actions to reduce costs and streamline its business to improve profitability. The company recently announced that it will reduce its headcount by 10,000 and close about 5,000 additional positions it has not yet filled. The new round of job cuts follows more than 11,000 layoffs announced in November 2022.
Meta is calling 2023 the “Year of Efficiency” and now expects its full-year spend to be in the range of $86 billion to $92 billion, compared to the previous estimate of $89 billion to $95 billion.
Is META stock a good buy?
Several analysts raised their price targets following Meta’s announcement of further job cuts. Stifel analyst Mark Kelley raised his price target for Meta Platforms to $230 from $210 and reiterated his buy rating. However, Kelley slightly lowered his revenue growth estimates, anticipating some degree of disruption as much of the job cuts is expected in April and May.
Overall, Wall Street’s Moderate Buy consensus rating is based on 36 buys, six holds, and three sells. The average META share price target of $224.88 suggests nearly 15% upside potential. Shares are up over 63% so far in 2023.
Snap has faced multiple headwinds over the past year, but it still managed to post 12% revenue growth. The company warned investors that it expects continued weakness in the first quarter of 2023, with revenue expected to fall 2% to 10% year over year.
At the recent Investor Day, management discussed several topics including augmented reality. The company is optimistic about its long-term potential, saying that at its current growth rate, it could reach over 1 billion people in the next two to three years.
It’s worth noting that Snap recently launched My AI, a new OpenAI-powered chatbot for its Snapchat+ subscribers. The new chatbot is based on the latest version of OpenAI’s GPT technology. The excitement generated by OpenAI’s ChatGPT tool has prompted several tech giants to accelerate their initiatives in the AI space.
Is Snap a Buy, Sell or Hold?
After Investor Day, Truist Financial analyst Youssef Squali stated that he “walked away from Snap’s Investor Day with cautious optimism.” The analyst noted that the company mentioned multiple product and monetization initiatives to reignite growth, aided by a growing user base that now tops 750 million monthly active users.
Still, Squali prefers to remain on the sidelines while Snap navigates the current headwinds and until he sees the company’s initiatives “returning to ad revenue growth,” which he doesn’t expect until the second half of 2023 expected.
With four buys, 16 holds, and three sells, Wall Street has a consensus hold rating for Snap stock. Snap’s average stock price target of $10.63 suggests the stock could range in the near-term. Shares are up over 19% year-to-date.
Based in China, Bilibili is one of the country’s leading video streaming and sharing platforms. The company markets itself as the online home for Gen Z fans of anime, comics and games.
Earlier this month, the company announced its fourth-quarter results. Revenue rose 6% to RMB6.1 billion (US$890.6 million). Higher value-added service revenue helped offset the impact of lower advertising revenue and a decline in mobile game revenue due to the lack of new game launches in the quarter. Meanwhile, better cost controls helped Bilibili trim its net loss by 29% to RMB1.5 billion (US$217.1 million).
Bilibili ended Q4 with an average of 326 monthly active users, up 20% year over year.
What is the price target for Bilibili stock?
Earlier this month, Citigroup analyst Brian Gong upgraded Bilibili to buy from hold while leaving the price target unchanged at $28. Gong expects the company’s revenue to be roughly flat year-on-year in the first quarter of 2023, but forecasts growth to pick up from the second quarter, driven by the launch of new games and the re-acceleration of value-added services.
Wall Street’s consensus strong buy rating for Bilibili is based on three buy and one hold ratings. BILI’s average share price target of $27.60 indicates upside potential of 24.4%. Shares are down 6% since the beginning of this year.
Social media companies could remain under pressure from the Near team due to the impact of macroeconomic challenges on ad spend. Analysts are very bullish on Bilibili and see higher upside potential in the stock from current levels based on narrower losses and improving sales over the year.