The firm also cut its price target to $180 a share from $215. The Wall Street low is $177. The average price target on Wall Street is about $246 a share, Bloomberg data show.
The Menlo Park, Calif., company is coming off disappointing fourth-quarter results, which were pressuring the stock, and analyst Michael Levine doesn’t see those issues abating anytime soon.
“We already had concerns, and they are only continuing to increase,” Levine wrote. “We would be surprised if the U.S. does not continue to decelerate.”
According to Levine, the Street’s ad-revenue estimates for the second half look “a bit too high and that lacking something transformative, they certainly are for 2021.”
Pivotal is the fourth firm on Wall Street to take a bearish turn with Facebook, compared with 47 firms with buy ratings and six with neutrals, according to Bloomberg data.
Facebook's "U.S. exposure could be in the 5% to 8% range to native direct-to-consumer advertising and [we] suspect that when this cracks, it is going to crack hard,” Levine wrote.
Last week, the tech investor Peter Thiel sold the majority of his stake in Facebook in two sales that netted him about $11 million in proceeds. He sold 16,862 shares at an average price of $210.17 and another 36,740 shares at an average $210.74.
The sales left him with about $2 million of stock in Facebook, Bloomberg reports.
Thiel was an early investor in Facebook and Bloomberg reports he once held 45 million shares.
Facebook shares were down 1% premarket.