Snap (NYSE:SNAP) and Pinterest (NYSE:PINS) have emerged as the top contenders on Wells Fargo’s platform-related stocks list. However, the investment firm has raised concerns regarding Google (NASDAQ:GOOG) (NASDAQ:GOOGL).
Pinterest’s Profits and Prospects
Pinterest is poised to benefit significantly from its collaboration with Amazon and its enhanced ad loading capabilities, as highlighted by analysts led by Ken Gawrelski. The anticipated ad load improvement in ’24, coupled with increased monetization in under-monetized categories, is likely to augment revenue from the Amazon deal in the U.S. and Canada to approximately $200M, with a full run-rate possibly reaching $360M. Consequently, Wells Fargo has revised its price target on Pinterest to $47 from $38.
Snapshot of Snap’s Potential
For Snap, 2024 holds promise as the company endeavours to reach its revenue targets. The introduction of Snap+ subscriptions and Spotlight is expected to make robust contributions. Snap’s announcement of surpassing 7M Snapchat+ subscribers in December further underscores the positive trajectory. Wells Fargo estimates that Snap+ will generate $424M in revenue in 2024, with ad-related sales projected at approximately $5.15B. In addition, Spotlight could yield as much as $204M in revenue this year, while the “emerging” MyAI ads may present an opportunity, potentially raking in $90M. In light of these optimistic prospects, Wells Fargo has set a $22 price target on Snap, a notable improvement from its previous assessment.
Galloping Worries Over Google
Despite the bullish outlook surrounding Snap and Pinterest, Wells Fargo is fostering reservations about the formidable platform giant, Google. The potential erosion of Google search’s ad market share, particularly in retail media, is a chief concern even before the advent of artificial intelligence. Furthermore, apprehensions linger over regulatory issues, particularly the company’s antitrust case with the Department of Justice. The analysts at Wells Fargo caution that ongoing legal challenges have the potential to disrupt Google’s core distribution strategy. Nevertheless, despite these apprehensions, Wells Fargo has raised its price target on Google to $148 from $129.
Additionally, Wells Fargo has also raised its price target on Meta (META) to $402 from $380, citing potential upside in earnings per share in 2024 and 2025. The analysts anticipate sustained marketing intensity by Chinese cross-border advertisers through ’24, but foresee a decline in Meta’s ad revenue growth in the latter half of the year due to formidable competitive trends and diversification of ad spend.
Summing up, Wells Fargo anticipates that Meta’s positive revision cycle will moderate in ’24, as the company navigates multiple micro and macro tailwinds, including cross-border commerce, Reels, and Advantage+, while new potential monetization initiatives such as Messaging, Threads, and Meta AI are yet to gain traction.