What happened
Shares of Meta Platforms (META -10.56%), which bumped slightly higher early on Thursday, continued their subsequent slide the next day. On Friday, that decline was exacerbated by an analyst's price target cut, and the stock closed the day more than 2% lower.
So what
That cut, enacted by BMO Capital analyst Daniel Salmon, was a fairly deep one. Salmon's new level on Meta Platforms' stock is $225 per share, well down from his previous $290. The prognosticator is maintaining his market perform (read: neutral) recommendation on the shares, however.
Image source: Getty Images.
His price target haircut is based on concerns about further declines in Meta Platforms' all-important daily active user (DAU) count. As the company's core Facebook and Instagram portals are heavily dependent on user participation and engagement, dwindling numbers are a worrying development. The company revealed its first-ever sequential drop in DAUs in its most recently reported quarter.
But Salmon, like other analysts, is nowhere near giving up hope on the social media giant's future. He wrote in his latest research note on the stock that he "wouldn't push back hard" on an argument in favor of buying the shares, as the company is still a top destination for online advertisers.
Now what
Meta Platforms was a soaring eagle of a stock for years, so it was inevitable that sooner or later it would lose altitude once a spot of bad news hit the headlines. That slide in users is definitely concerning, and the company needs to do a better job convincing investors it's addressing it.
Still, Facebook and Instagram continue to be powerful social media sites and unavoidable destinations for advertisers, so Meta Platforms remains an important and high-potential business.
