Is Facebook Losing Out To TikTok? Brazilian Investment Bank Liquidates 4-Year Long Position In Meta

Meta Platforms, Inc. META stock is slowly losing its appeal among institutional investors amid its recent fundamental setbacks.

IP Capital Partners, one of Brazil's oldest independent investment managers liquidated its entire stake in Meta in early 2022, a monthly report from the company to its clients revealed. Meta stock had been part of its funds since 2018.

The firm attributed its decision to the "growing evidence of competition from TikTok," and the primary and secondary consequences of it.

IP Capital highlighted the engrossing nature of the TikTok content and also the likelihood of the short-video format gradually gaining universal appeal. Meta did react with Reels on the Instagram platform but has allowed TikTok to gain too much scale, it said.

"We estimate that in the first quarter of 2022, American audiences spent twenty times more time watching TikToks than Reels on Instagram," the firm said.

Related Link: Why TikTok Might Turn Out To Be Meta Platform's 'Formidable Foe'

Secondly, Meta's accelerated adoption of Reels within Instagram and Facebook has forced it to exchange its highly-monetized segments such as Feeds and Stories for a new one that is less monetized, it added. The firm sees Meta's revenue growth decelerating from 37% in 2021 to single digits in 2022.

With the shares having fallen by around 40% in recent months, IP Capital said it has preferred to allocate resources to other opportunities.

Rio de Janeiro-based IP Capital Partners, founded in 1988, invests in both domestic stocks and those listed overseas.

Price Action: Meta closed Tuesday's session down 4.09% at $157.05, according to Benzinga Pro data.