TLDR
- Meta stock has dropped significantly, falling 4.1% on Tuesday and continuing to slide, now down about 22% from its February peak
- KeyCorp reduced its price target from $750 to $710 while maintaining an “overweight” rating
- Cathie Wood’s ARK Invest sold over $7 million in Meta stock (12,000 shares) on March 18
- Meta’s heavy investments in AI and the unprofitable Metaverse division (Reality Labs) continue to concern investors
- The tech sector as a whole is experiencing a selloff, with the Nasdaq Composite down over 12% this month
Meta Platforms, the tech giant behind Facebook, Instagram, WhatsApp, and Threads, has seen its stock price tumble significantly in recent weeks. The company’s shares have fallen into negative territory for the year, erasing previous gains of up to 26% and marking a 22% decline from its February peak.
On Tuesday, March 18, Meta’s stock dropped 4.1%, outpacing broader market declines. The S&P 500 fell 1.3% while the Nasdaq Composite lost 1.9% on the same day.
A key factor in the recent decline was KeyCorp’s decision to reduce its price target on Meta from $750 to $710. While the firm maintained its “overweight” rating, suggesting potential upside, the downgrade added to investor concerns.
This price target reduction comes amid a broader tech sector selloff. The Nasdaq-100 has dropped more than 12% this month as trade tensions escalate between the U.S. and key partners in tech supply chains.
Adding to the pressure, prominent investor Cathie Wood’s ARK Invest sold over $7 million worth of Meta stock on March 18. This represented approximately 12,000 shares and marked ARK’s first sell-off of Meta in nearly a year.
Meta’s current market capitalization stands at $1.475 trillion, but its share price has retreated significantly from its 52-week high of $740.91. As of March 19, the stock was trading at $581.83 per share.
The company faces multiple challenges
The company faces multiple challenges beyond market sentiment. Meta continues to invest heavily in artificial intelligence infrastructure, with projected capital expenditures of $60-65 billion in 2025 alone.
While Meta’s AI initiatives have shown some success, with its open-source Llama models and Meta AI chatbot surpassing 1 billion downloads, these investments are raising concerns about increasing fixed costs during uncertain economic times.
Another experimental feature raising eyebrows is Meta’s testing of AI-written comments on Instagram. This follows earlier user pushback against AI-generated profiles that could interact with real users by posting, liking, and commenting.
The company’s Reality Labs division, responsible for virtual reality and augmented reality efforts, continues to be a financial drag. The division lost $13.7 billion in 2022 alone, with ongoing losses since then.
Analysts remain cautiously optimistic
Despite these challenges, many analysts remain cautiously optimistic about Meta’s prospects. The consensus price target ranges from $714 to $738, suggesting a potential upside of 23-27% from current levels.
Meta’s massive user base of nearly 4 billion monthly active users across its platforms remains a key strength. Instagram has reportedly seen a 6% increase in user time during 2024, demonstrating the company’s ability to maintain engagement.
Competition from platforms like TikTok and Snapchat continues to pose a threat to Meta’s dominance. These rivals are attracting user attention and advertising dollars, which puts pressure on Meta’s core business model.
Regulatory concerns also loom on the horizon. An upcoming FTC trial scheduled for April 14, 2025, could potentially force Meta to divest Instagram and WhatsApp, a prospect that worries investors.
From a technical analysis perspective, Meta’s stock is currently testing important support levels around $582, including its 200-day exponential moving average and long-term trend line drawn from 2022 lows.
The broader economic environment isn’t helping. Persistent inflation, declining consumer sentiment, and recession fears have led many investors to move capital out of tech stocks and into safer investments.
Despite the recent decline, Meta’s price-to-earnings ratio of 25.3 may still represent reasonable value compared to some tech peers. This valuation metric suggests the stock might be attractively priced for long-term investors.
For now, market participants are closely watching key support levels, with $580-550 representing a broader zone defined by November lows and various technical indicators. If breached, analysts suggest a further decline to around $500 might be possible.
The coming weeks will be crucial for Meta as investors assess whether this correction represents a buying opportunity or the beginning of a more prolonged downturn for the social media giant.
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