Meta price target slashed at Roth

In his April 21 first-quarter preview, Rohit Kulkarni, Managing Director and Senior Research Analyst at Roth Capital Partners maintained his “Buy” rating on Meta Platforms (Meta Platforms Inc. Stock Quote, Chart, News, Analysts, Financials NASDAQ:META) with a 12-month price target of $580, down from a previous target of $730.

The stock closed at $484.66 on April 21, 2025.

Meta is scheduled to report Q1 earnings after market close on April 30. Kulkarni has lowered his estimates for Q2 and Q3, citing expectations of weaker-than-normal seasonal trends. The reduced price target is based on a valuation of 21 times the estimated 2026 GAAP EPS, excluding cash, down from the previous 24-times multiple.

Despite the adjustment, Kulkarni calls Meta his top pick among mega-cap stocks heading into earnings, citing anticipated AI product updates, developments from the recent LlamaCon event, and the potential for a revised outlook on 2025 operating and capital expenditures.

In his preview, Kulkarni outlined key investor questions and offered his expectations.

On Chinese e-commerce advertising, Kulkarni estimates that 10% to 11% of Meta’s ad revenue came from Chinese companies in 2024, with major players like Temu and Shein contributing roughly 3%. “After Temu and Shein pulled back their spending in early April, we think small AOV brands and luxury brands are coming back to META,” he noted, adding that softening CPM growth has helped attract these advertisers back to the platform.

Regarding the upcoming LlamaCon event, he expects Meta to make a splash. “We believe META will release Llama 4 Behemoth at LlamaCon next week and also provide insights into their latest ‘mega cluster’ of 1000s of GPUs used to train the latest model.”

As for Reality Labs spending, the analyst doesn’t expect a significant shift. “However, META might telegraph the tariff impact on making new AR/VR units, and thus might go down the route of hinting at lower marketing spend this year.”

Kulkarni believes that Meta Platforms Inc. will generate approximately $93.4-billion in adjusted EBITDA on $183.1-billion in revenue in fiscal 2025. He expects those numbers to increase to $106.5-billion in adjusted EBITDA on $208.9-billion in revenue in fiscal 2026.

On the broader cost outlook, Kulkarni added that its unlikely that META will lower its operating expense forecast. “Iin our opinion. If the company lowers its OpEx forecast, it would be viewed as a clear positive for the stock.”

Kulkarni said OpenAI’s recent pricing tiers have strengthened its lead in the so-called “chatbot wars.”

“We expect Zuck to talk about rising usage/engagement on Meta.ai as well as potential ways in which META could monetize this engagement, both from an ads standpoint and from a subscription standpoint,” Kulkarni said.