By Sam Boughedda
Investing.com -- Morgan Stanley analyst Brian Nowak lowered the price target on Meta Platforms Inc (NASDAQ:FB) to $325 from $360, saying in a note to clients that the company's share "outperformance may take time."
Meta shares gained 2.11% Wednesday.
“Our bottom up analysis of Reels user adoption and monetization rates speak to larger near-term headwinds," said the analyst, adding that there is, however, "direct evidence that FB will indeed successfully monetize Reels.”
The analyst acknowledged that the shift towards Reels is “a larger near-term uncertainty."
Instagram's Reels product is a direct competitor to the extremely popular video-focused social app TikTok.
"We expect Reels advertising to ramp slower...because we see FB prioritizing engagement over monetization. As such, we expect a lower ad load for now," continued Nowak.
"We are also mindful that TikTok’s materially lower monetization rate could be a factor impacting how quickly FB pushes advertising within Reels."