Meta at risk of losing billions as Chinese advertisers cut spending on Facebook and Instagram

Meta AI

Meta, the company behind Facebook and Instagram, might be in for a big hit this year. Analysts say it could lose up to $7 billion in ad revenue, and the reason? The ongoing US–China trade tensions under President Trump’s second term.

What’s going on?

A new research note from MoffettNathanson explains it like this: Big Chinese retailers like Temu and Shein, who spend huge amounts advertising on Facebook and Instagram, may cut back their budgets. Why? Because Trump’s tough tariffs on Chinese goods are making business harder for them in the US.

If these companies pull back on ads, Meta loses out — big time.

How important is China to Meta?

According to Meta’s 2024 annual report, the company made over $18 billion in revenue from China — about 11% of its total earnings. And that’s in a country where Meta’s apps are technically banned!

The trick is, Chinese companies still use Meta’s platforms to target international customers — especially American shoppers. So while Meta doesn’t have users in China, it makes a lot of money from Chinese advertisers.

What happens next?

Analysts are warning that this could be just the beginning. If the U.S. economy slides into a recession — something many experts are already worried about — Meta could lose even more. In a worst-case scenario, it could be looking at a $23 billion loss in ad revenue next year.

Despite this, the analysts haven’t lost all hope. They still rate Meta as a "Buy" but have lowered their price target for its stock. Meta shares have already dropped nearly 19% since Trump took office again.The company’s next earnings report is coming out next Wednesday — and all eyes will be on the numbers.