According to Morgan Stanley, Meta’s latest quarterly earnings results should give investors pause. Analyst Brian Nowak downgraded Meta’s stock to parity due to overweight and roughly halved his price target for the social stock, citing higher capital expenditures and natural cash flow. due to lower company. “We see $69 billion in META investment over 2 years, and AI-driven data center construction is an indication of higher capital intensity,” Nowak wrote in a Thursday note. structurally. “While these investments could make the META stronger in 5 years, we see ’23 FCFs that are 60% lower and higher risk to demonstrate ROIC and incremental growth.’ The analyst reduced his price target to $105 from $205.The new target is about 19.1% lower as the stock closed Thursday at $129.82. fell more than 20% in pre-market trading on Thursday, after the company reported disappointing third-quarter results and provided weak guidance for the fourth quarter. Now, as the tech company deals with slowing ad spend, Apple’s privacy changes, and greater competition from TikTok, analysts expect the company’s troubles to continues as Meta increases short-term investment to build its AI capabilities, though he notes that they are showing “early positive signals” about improving user engagement on Reels. “The critical revenue and engagement boost from these investments may take time (until year 23?) and uncertainty,” reads the note. “And in the meantime, we see possibilities. earning capacity imports continued to decline. Consider that our revenue forecast ’23/2424 is down 1%/1% (modestly slower organic growth and slower exchange rate ‘…while FCF’ 23/) 2424 down 59%/48%.” — Michael Bloom of CNBC contributed to this report.