Why Barclays Thinks Meta and Other Social Media Stocks Could Be Red-Hot

Social media stocks have been hit hard this year, and many investors are wondering if the bottom is in sight. While that bearish outlook might be pervasive for many, one big Wall Street name thinks that there is a lot of upside potential in this industry.

Barclays has issued a few calls with a focus on social media companies. Each call is incredibly positive, forecasting massive upside in both the near and long term. However, there is one exception in the group.

Ross Sandler was the lead analyst on the call, and he noted in the report that investors are “rightfully wary” about the trajectory of digital advertising growth in 2022, especially into second-quarter earnings. Sandler believes a “perfect storm” is here, given the step-down in spend and conversions across the whole internet ecosystem in the second quarter, an “ascending trajectory” from new challengers like TikTok and Apple, and the “obvious tough comps which are well documented.”

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Ultimately, he thinks this “cocktail of events is likely to generate the lowest growth rates for the sector in years.” However, Sandler believes that current stock valuations already reflect some of this.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

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Barclays reiterated an Overweight rating on Meta Platforms Inc. (NASDAQ: META | META Price Prediction) but cut the $370 price target to $280. That implies upside of 66% from the most recent closing price of $168.19. The stock traded around $169 early Thursday, in a 52-week range of $154.25 to $384.33. Shares are down over 50% year to date.

On Pinterest Inc. (NYSE: PINS), Barclays reiterated an Equal Weight rating and lowered the $24 price target to $20, implying relatively flat performance from the most recent closing price of $20.23. Pinterest stock has a 52-week trading range of $16.14 to $81.77, and it traded near $20 a share on Thursday. The stock is down 46% year to date.

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Barclays also reiterated an Overweight rating on Snap Inc. (NYSE: SNAP). The $42 price target was cut to $20, implying upside of 39% from the most recent close at $14.38. The stock traded at around $14 on Thursday, in a 52-week range of $11.88 to $83.34. Shares are down over 70% year to date.