Loop Capital lowered its price target on Meta Platforms (NASDAQ:META) from $900 to $695 while maintaining a Buy rating, citing concerns about weakening ad pricing pressure ahead of the company’s first-quarter earnings report, scheduled to be released on Wednesday.

The firm expects Meta to deliver solid Q1 results but warns that management may offer a softer second-quarter outlook. A key issue is the pullback by Chinese cross-border advertisers, who have been scaling back spending in the U.S. due to changes around the de minimis exemption and new tariff pressures. Since Meta is a primary channel for customer acquisition, the drop in aggressive Chinese ad spending is reducing bidding competition and dragging down overall ad prices.

Loop Capital estimates that about 40% of the revenue associated with this previously high-spending cohort could be lost, though some of that impact may be offset as ad inventory shifts to the next-highest bidders. Adding to the challenge, consumer engagement metrics like click-through and conversion rates have been weakening, which could force further budget reductions from performance marketers if the trend continues.

The analysts now project Meta will guide second-quarter revenue to between $40.5 billion and $43.0 billion, slightly below the current consensus of $43.9 billion. While lower than previous expectations, they believe this guidance could still be better than the market currently fears.

Despite the near-term pressures, Loop Capital continues to see upside for Meta longer term, justifying the maintained Buy rating even as caution grows around short-term advertising dynamics.