Trump’s tariffs, which began on April 2, are lesson days and are due to send shockwaves through global markets. The tech sector, which many thought would be protected, is now clearly under pressure. Apple, Nvidia and Tesla are already hits. Now the meta is in the crosshairs.
A new research note from Moffettnathanson says that if Chinese retailers start to cut their marketing budgets significantly, Meta could lose up to $7 billion in advertising revenue this year. The fallout has been linked to Trump’s drastic Chinese tariffs, already causing a major pullback from companies like Temu and Shein.
The news comes a day later, when Trump’s tariffs in China reportedly lost $1.15 trillion in three months.
According to Meta’s latest annual report, the company pulled in $183.5 billion from China in 2024. This is more than 11% of total revenue. This is a huge number for countries where Meta’s platforms are technically banned. But that makes sense. The Chinese e-commerce giant uses Facebook and Instagram to actively target American consumers with advertising.
Now that these same companies are tightening their budgets, Meta’s advertising business looks more vulnerable.
“The importance of China to Meta’s business cannot be overstated,” the analyst wrote.
They believe China is likely to be the second largest revenue stream in the meta after the US.
“Meta does not provide a breakdown of national revenue within Europe, but logically we can speculate that China is the second largest revenue stream in the meta after the US. This is a prominent position for countries with no users or active platforms in the meta.”
The warning sign is already displayed. CNBC recently reported that Temu began cutting US ad spending and its app store rankings have fallen sharply since tariffs were enacted.
It’s getting worse. If the US economy falls into a recession (although growing analysts and CFOs are hoping, Meta may be staring at the perfect storm. The report estimates the worst-case scenario in which Meta loses up to $23 billion in advertising revenue in 2025, with revenues plummeting by 25%.
Analysts didn’t write the words: “Meta is especially exposed to pullbacks of ad spending from Chinese advertisers.” The broader recession combined with escalating trade tensions will double the blow, cyclical ad weakness, and even the indigenous freezing of China.
Despite the pessimistic outlook, Moffettnathanson still maintains the Meta purchase rating, but has reduced its price target from $710 to $525.
Meta stocks have already been hit. Since Trump was sworn in for his second term, the stock price has fallen by about 19% to $499.36. Investors don’t have to wait long to be more clear. META is expected to report first quarter revenue next Wednesday.
Meta, meanwhile, is not the only tech giant that feels a stab at Trump’s tariffs. Nvidia said yesterday that its $5.5 billion revenue for the quarter is expected to be a hit after it was forced to halt shipments of its H20 AI chips to China and other restricted regions. Investors did not underestimate the news. Inventory fell 6% due to after-hours trading.
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