Meta’s core advertising business may suffer a significant financial blow this year, with analysts projecting a potential $7 billion revenue loss due to escalating trade tensions between the U.S. and China. According to a research note by MoffettNathanson, the renewed China tariffs under President Donald Trump are leading key China-based online retailers, such as Temu and Shein, to scale back their advertising budgets on Meta’s platforms like Facebook and Instagram.
In Meta’s latest annual report, the company disclosed that revenue from China reached $18.35 billion in 2024, accounting for just over 11% of total sales. Although Meta’s platforms are not officially available in China, a substantial portion of this income is derived from Chinese advertisers targeting foreign consumers. The analysts believe that Temu and Shein alone represent a major share of this revenue, and their advertising cutbacks could significantly affect Meta’s 2025 ad performance.
The potential reduction in advertising budgets is already evident, with Temu reportedly pulling back from its aggressive U.S. ad campaigns. Such changes, prompted by increased tariffs and trade uncertainties, may lead to decreased app visibility and user engagement, further dampening ad performance.
MoffettNathanson emphasized the strategic importance of China for Meta, stating that despite the platform’s lack of presence in the country, it remains one of Meta’s most lucrative markets—possibly the second-largest after the U.S. The analysts noted that the loss of Chinese advertising spend would represent a substantial and targeted setback.
The situation could become more severe if economic conditions worsen globally. The research note outlines a scenario in which a prolonged economic downturn, coupled with further deterioration in U.S.-China relations, could lead to a $23 billion drop in Meta’s 2025 advertising revenues, slashing the company’s projected earnings by 25%. This would place Meta under dual pressure from both macroeconomic weakness and geopolitical disruption.
Despite the concerns, MoffettNathanson maintains a Buy rating on Meta stock but has revised their target price downward from $710 to $525. Since President Trump’s return to office, Meta’s stock has declined by about 19%, currently trading at $499.36. The company is expected to report its first-quarter earnings next Wednesday, which could provide more insight into the impact of these developments.
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