Meta Platforms (NASDAQ: META) reported disappointing Q2 earnings, leading to an 8% drop in stock price post-announcement. Revenue rose 28% year-over-year, but the company missed earnings-per-share (EPS) estimates largely due to over $1 billion in severance expenses and ongoing legal fees related to youth-related issues.
Analysts reacted negatively, with the average price target falling by over 10% post-report. The MarketBeat consensus target now sits around $790, indicating over 30% upside potential, though recent analyst adjustments suggest targets are shifting closer to the mid-$700s. Notably, some bullish estimates saw significant cuts, with Susquehanna’s target dropping from $900 to $650.
Despite a strong growth rate, investor confidence is wavering as Meta seeks growth beyond advertising, including monetizing its Muse Spark 1.1 model and exploring compute sales to third parties. Nonetheless, risks surrounding ongoing legal battles and delayed non-advertising growth avenues remain significant.
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