By Senad Karaahmetovic
MoffettNathanson analyst Michael Nathanson has revised his long-term bullish forecasts down after Snap issued a revenue warning earlier this week about Q2 and the general macroeconomic environment.
As a result, Nathanson lowered Q2 revenues by around -6% to -7% for Snap (NYSE:SNAP), Meta (NASDAQ:FB), and Twitter (NYSE:TWTR), and by around -2% for Alphabet (NASDAQ:GOOGL).
“After years of uber-bullishness, we are truly concerned about longer-term growth in digital advertising. As such, we have severely cut our out-year revenue forecasts for all these companies,” Nathanson said in a client note.
“We are very concerned that the 2021 base of advertising was underpinned by both unsustainable corporate profitability and explosion in SME/e-commerce activity, which is now succumbing to a combination of factors. As such, we are lowering our long-term online ad growth forecasts over the 2021-2025 period from a CAGR of 18.5% to 12.5%. Note that these cuts do not contemplate the economic impact of a U.S. recession in the near term.”
Finally, the analyst expects that consensus estimates will have to be “massively lowered” to reflect slowing growth.
Snap price target is cut to $23.00 from $44.00, FB to $280.00 from $330.00, Alphabet to $2,650.00 from $3,100.00.