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Shares of Meta Platforms Inc (NASDAQ:META) are down more than 2% after Needham & Company analyst Laura Martin downgraded to Underperform from Hold.
The analyst told investors to “use Meta as a source of funds” due to worsening short-term fundamentals, among other things. and risks tied to structural valuation.
“Meta has stated that it is investing in the Metaverse at the same time it is guiding to slower revenue growth. We lower our estimates because we believe cost growth will far exceed revenue growth for the next 2 years,” Martin told clients in a note.
Moreover, the analyst sees structural valuation risks.
“We recommend investors remain on the sidelines while they assess several structural valuation risks including consumer behavior shifts, competition, moat degradation, regulatory risks and Metaverse investment risks.”
