Meta's ad pricing challenges easing up, Piper Sandler says
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A mid-quarter update on pricing at Meta Platforms (NASDAQ:META) by Piper Sandler is moderately positive, suggesting some of the company's headwinds are "moderating" a bit.
Price declines (in CPM) seem to be continuing at core "blue" Facebook in April and May, analyst Thomas Champion said, while Instagram looks "more solid." And looking at the aggregate effect, the May improvement is encouraging, he said.
As with other analysts, Piper Sandler has lowered estimates while absorbing challenges to the digital ad market, as well as e-commerce headwinds.
"That said, it's possible SNAP is an outlier as FB pricing data does not seem to indicate deterioration," Champion said. It was a guidance warning from Snap (SNAP) that sent not only ad-facing digital companies lower, but also chunks of the broader market.
Meanwhile, Meta's Q2 revenue guidance is conservative, suggesting zero growth at the midpoint: "To us, it looks like a low bar."
Pricing comparisons may remain challenging throughout much of the year, but March and April seem to have been the most difficult, Champion said.
Meta stock (META) is 4.5% higher, riding along with the stock market after the Fed's move to hike interest rates by three-quarters of a percentage point.
On Tuesday, a UK tribunal decision meant Meta could keep fighting for its purchase of Giphy but largely sided with the government.