- China’s Ad Spend Could Hit Meta Hard: Meta’s ad revenue from Chinese companies jumped $11 billion over two years—$7 billion of which could be at risk due to renewed U.S.-China trade tensions and tariff changes.
- Potential $23B Revenue Loss Looming: Analysts warn a prolonged trade war and economic slowdown could wipe $23 billion off Meta’s 2025 ad revenue, slashing earnings by 25%.
- Price Target Slashed but Still a Buy: MoffettNathanson cut Meta’s price target from $710 to $525 but maintained a “buy” rating, noting the stock is down over 15% since Trump’s new tariffs were announced.
Meta Platforms (yeah, Facebook and Instagram’s parent company) could be facing a pretty big headache in China. And no, it’s not about censorship this time. It’s about money—lots of it—and how the Trump-era tariffs might come back to bite.
So here’s the scoop. According to analysts at MoffettNathanson Research, Meta’s been pulling in serious ad dollars from Chinese businesses. We’re talking billions. But as U.S.-China trade tensions heat up again—thanks to renewed tariffs and Trump’s push to close tax loopholes—it could get messy. Fast.
Wait, What’s the Big Deal?
Well, for starters, Meta’s ad revenue from Chinese advertisers has shot up by $11 billion over the past two years. That’s almost a quarter of Meta’s entire ad growth. Pretty wild for a company that technically doesn’t even operate in China (because, y’know, bans).
And while not every dollar is tied to e-commerce, analysts think about $7 billion of it is. That chunk? Could be at risk if the U.S. drops the hammer on the “de minimus” rule—a trade loophole that lets Chinese sellers ship small stuff (under $800) to the U.S. without paying tariffs or messing with customs red tape.
But if that loophole closes? Chinese sellers might raise prices to offset costs… and potentially cut back on ad spending.
Bigger Picture: It’s Not Just About Ads
The analysts aren’t just sounding alarm bells over tariffs. They’re also worried about a general economic slowdown. And slower economies usually mean less consumer spending… which means fewer ads… which means, yeah—bad news for Meta.
Here’s where things really start to sting. If this drags out into a prolonged trade war, they estimate Meta could lose up to $23 billion in ad revenue by 2025. That would be a serious blow, knocking their 2025 earnings down by about 25%.
Yikes.
Still a “Buy”… But Not as Pretty
Despite all this, the analysts didn’t fully jump ship. They’re still bullish on Meta long term, keeping a buy rating. But they did slash their price target—from $710 to $525. Ouch. Not great when your stock’s already taken a 15.3% dive since early April.
That said, Meta shares actually bounced up 3.2% on Tuesday. But with so much uncertainty brewing between Washington and Beijing, it’s hard to say how long that will last.
No official word from Meta just yet… but this situation? Definitely one to watch.
