- RBC Capital analyst Brad Erickson dove in deep with SMB-focused advertising agencies for near-term spending feedback and the ever-evolving competitive landscape across different ad channels.
- Bottom line, he found clear signs of cracks forming on overall spending though interestingly, SMB weakness seems very much yet to entirely run its course, indicating potentially a more persistent risk to 2H estimates.
- Competitively, TikTok spends are likely to get cut before Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) or even Meta Platforms Inc (NASDAQ:META) near-term due to it being less mission-critical for revenue generation.
- However, he detected noticeable TikTok ad platform & scalability improvements which is an incremental negative for META longer-term vs. his prior checks.
- He reduced estimates and price targets on META, GOOGL, Pinterest, Inc (NYSE:PINS) & Amazon.com Inc (NASDAQ:AMZN).
- He cut the price target of META to $200 from $240; GOOGL to $2,700 from $3,420; AMZN to $144 from $175; PINS to $23 from $26.
- He had lowered the same for Snap Inc (NYSE: SNAP) in May post negative preannouncement.
- He found arguments for multiple expansion from the current attractive levels on GOOGL & META as somewhat weak, leaving less room for upside in the stocks pending signs of budget stability and better visibility around reacceleration.
- Price Action: META shares traded lower by 0.21% at $169.77 on the last check Monday.
