Meta Platforms, Inc. (META) Price Target Cut to $580 but Remains a Top Pick Ahead of Earnings

Meta Platforms (META) has faced a notable downgrade from Roth Capital Partners, which trimmed its price target to $580 from $730, yet the firm remains bullish on the company’s long-term prospects. With Meta’s Q1 2025 earnings report looming on April 30, investors are weighing near-term headwinds against the promise of AI-driven innovation and structural growth opportunities.

The Near-Term Concerns: Seasonality and Ad Revenue Shifts

Roth Capital’s analyst, Rohit Kulkarni, cited weaker-than-expected seasonal trends as a key factor in trimming his price target. His revised forecasts for Q2 and Q3 2025 reflect concerns about ad revenue growth, driven by macroeconomic pressures and shifts in advertiser spending. For instance, Chinese e-commerce giants like Temu and Shein—key Meta advertisers—paused spending in early 2025, though smaller brands and luxury advertisers are now returning. This dynamic, however, has led to softening CPM growth, as lower-margin advertisers offset premium spend.

Kulkarni also adjusted Meta’s valuation multiple to 21x 2026 GAAP EPS (excluding cash) from 24x, acknowledging reduced near-term growth optimism. This multiple contraction accounts for much of the $150 price target cut. Yet Meta’s stock closed at $484.66 on April 21—well below the $580 target—suggesting further upside if earnings and guidance align with expectations.

The AI Catalyst: LlamaCon and Long-Term Value

Despite the near-term challenges, Kulkarni’s Buy rating hinges on Meta’s leadership in AI. The company’s Llama series models, particularly the anticipated Llama 4 ("Behemoth"), are poised to power its AI platform, Meta.ai, and unlock new monetization avenues. At its upcoming LlamaCon event, the firm is expected to showcase advancements in large language models (LLMs) and GPU infrastructure, which could drive engagement and subscriptions.

Moreover, Meta’s Reality Labs division, despite its high costs, continues to innovate with AR/VR hardware like the Quest 3. While Kulkarni does not foresee significant cost cuts here, any guidance on tariff impacts or marketing efficiency could surprise investors positively.

Earnings Outlook: Revenue and EBITDA Projections

Kulkarni’s fiscal 2025 revenue forecast of $183.1 billion and adjusted EBITDA of $93.4 billion reflect a path to stabilization, with growth accelerating to $208.9 billion and $106.5 billion by 2026. These figures, underpinning Roth’s $580 target, assume that Meta’s core ad business will recover as AI-driven tools enhance targeting and user engagement.

The April 30 earnings report will be pivotal. Analysts will scrutinize:
- Ad revenue trends: Whether the shift to lower-AOV advertisers is temporary or structural.
- Operating expenses: Whether Meta can offset inflationary pressures without sacrificing innovation.
- AI adoption metrics: User engagement with Meta.ai and potential monetization timelines.

Consensus and Contrarian Risks

While Roth’s downgrade stands out, the analyst consensus remains bullish, with a “Moderate Buy” rating and an average price target of $676.55. This suggests broader confidence in Meta’s long-term AI narrative. However, risks include overvaluation of AI’s near-term impact, regulatory scrutiny of data practices, and competition from rivals like Google and TikTok.

Conclusion: A Stock for the Long Run

Meta’s strategic pivot to AI positions it as a leader in the next wave of tech innovation. Even with the price target cut, the $580 target implies a 19.7% upside from April 21’s close, while consensus targets suggest even higher potential. The April 30 earnings will test whether Meta can bridge the gap between short-term softness and long-term vision.

Crucially, Meta’s $93.4 billion 2025 EBITDA and its $21x 2026 multiple reflect a disciplined valuation that accounts for current headwinds. If LlamaCon delivers tangible AI advancements—and ad revenue stabilizes—the stock could reaccelerate. For investors with a multi-year horizon, Meta remains a compelling play on the future of social media and AI, even if the path is bumpy.

In sum, the price target cut is a reminder of Meta’s volatility, but its AI and social media dominance justify its place in growth portfolios. The earnings report will be the next critical test—but the long game still favors Meta.