Mid-March checks indicate potential online ad spending risk due to weak economic indicators and the impact of the latest tariff announcements, BofA Securities said in a note Wednesday.
The investment firm said it lowered its 2025 online ad spend estimates by about $21 billion, assuming a 15% to 20% lower brand spend and a 4% to 5% reduction in direct response, or DR, budgets.
The tariffs and macroeconomic uncertainty could worsen current company-specific challenges, such as tough comps with increased financial and insurance spending in 2024 for Alphabet (GOOG, GOOGL), possible 3% revenue exposure from Temu and Shein in the US for Meta Platforms (META), "significant" exposure to home goods and consumer packaged goods categories for Pinterest (PINS), brand spend headwinds for Snap (SNAP), and difficult IPO comps and a potential pullback in experimental ad spend for Reddit (RDDT), according to the note.
The firm lowered its 2025 revenue estimates by 3.7% for Alphabet, 4.4% for Meta, and 5.8% to 6% for Pinterest, Snap and Reddit.
BofA also lowered its price targets to $185 for Alphabet, $640 for Meta, $35 for Pinterest, $10.50 for Snap, and $110 for Reddit.
Price: 510.81, Change: +0.36, Percent Change: +0.07
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