The “antisocial” trend continues on Wall Street, as Evercore ISI analyst Anthony DiClemente has slashed his price targets on shares of Snap, Facebook and Twitter amid some big-picture challenges facing those businesses, according to a Dow Jones Newswires report supplied to EFE on Thursday.
“While advertising-driven internet stocks have underperformed in recent months…we worry that regulatory concerns are unlikely to dissipate in the near term,” DiClemente wrote in a research report Thursday. “While these concerns are at least partially priced into stocks, they may continue to weigh on the largest internet names.”
Of the three big social-media stocks, Snap is getting hit the hardest Thursday morning, falling 6.5 percent to $7.70. DiClemente cut his target on the shares to $7 from $9, citing weak user-growth trends, a deceleration in revenue growth, and an executive exodus leading up to the big holiday quarter. He maintained an Underperform rating on the stock.
DiClemente is concerned about the impact Facebook’s Instagram service is having on Snapchat usage and the possibility that Snap can recover. “We believe that competition (particularly from Instagram) is irreversibly reducing Snap’s opportunity to deliver on long-term investor expectations,” he wrote.
For the third quarter, he sees a fairly low bar in terms of Wall Street’s revenue estimates, but he doubts that investors will be willing to overlook “a continuation of declining user trends.”
DiClemente remains bullish on Facebook, but he sees some risk to the stock stemming from efforts the company is taking to prioritize safety and security on the platform. The elimination of third-party data integration could be a risk to [fourth-quarter] ad demand at the margin, ” he wrote.
That said, DiClemente remains upbeat about Instagram. His analysis of data from SensorTower, which looks at app usage, leads him to believe that “Instagram audience growth is offsetting weaker trends” for the core Facebook product, according to a Dow Jones report supplied to EFE.
He lowered his price target on the stock to $195 from $200 while writing that Facebook is still “the fastest-growing as well as least expensive stock in our coverage.”
Twitter’s stock was a high flier to start the year, but it’s down 36.
4 percent over the past three months. Even after that drop, DiClemente has some concerns about the shares, mainly stemming from expense issues at the company. He expects Twitter to continue to invest heavily in safety, product improvements, and sales support.
“Higher than expected expense growth remain our current hesitation on the stock,” wrote DiClemente, who lowered his price target on the stock to $36 from $40. He rates the stock at In-line.
DiClemente’s adjustments come as the Global X Social Media ETF is down 6 percent so far this year, added the Dow Jones report.
This article provided by NewsEdge.