Dear Verizon, you may want to read this Goldman Sachs research note about AOL

So Verizon is buying AOL for $4.4 billion, or $50 per share.

After news of the deal broke, a number of people also noted that in a somewhat awkward twist, analysts at Goldman Sachs downgraded their outlook on AOL shares just last week.

On May 5, Goldman put a “Sell” rating and $38 price target on AOL, basically telling its clients the stock was not something they should want to own right now. In fact, they might even consider selling it.

Following the news of the company’s deal with Verizon, shares of AOL were up 18%.

However!

Goldman’s note actually has a few warnings that Verizon may want to pay attention to.

In announcing the deal, Verizon said the deal to buy AOL “supports our strategy to provide a cross-screen connection for consumers, creators, and advertisers to deliver that premium customer experience.”

And so while AOL owns a bunch of content, brands such as The Huffington Post, TechCrunch, and Engadget, what Verizon really wants is the ad technology and the ad platform. And this might be a challenge for Verizon.

Here’s Goldman:

While AOL has made progress in its ad business through acquisitions, investments, and integrations, we see an increasing competitive risk from larger platforms like Facebook growing capabilities to reach audience off its platform. With Facebook increasingly bridging its “people-based marketing” with Atlas and LiveRail to deliver the demo targeting TV buyers are accustomed to, AOL could lose programmatic share, particularly in video.

In its note, Goldman says all of AOL’s profits in 2014 came from its “membership group,” which is basically dial-up internet service. This is not what Verizon is buying AOL for.

Again, what Verizon wants is AOL’s ad platform, which is not profitable, faces lots of competition, and requires lots more investment.

Goldman again:

Despite the investments AOL has made, which are focused in video, programmatic, native, and brands, all secular growth areas, we believe the competitive environment in ad tech and content as well as changing consumer behavior are headwinds that could hinder progress.

Now, in fairness to Goldman, the firm knew a buyout would be a problem for its call, writing that an “upside risk” to its price target — a situation that would make the company’s call wrong — included an event that saw AOL bought or broken up.