Why Meta Platforms Stock Is Falling Today
Key Points
Meta stock is falling as the company prepares to defend itself in a major lawsuit brought by 29 state Attorneys General alleging it knowingly fostered addictive behavior in minors.
The case follows Meta's recent $1 billion loss in New Mexico, where the company was ordered to pay damages and change certain policies.
Industry observers are calling this a potential "big tobacco moment" for big tech, with far-reaching implications for social media companies if Meta loses.
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Meta Platforms (NASDAQ: META) stock is down Monday, falling 3.8% as of 2:43 p.m. ET. The S&P 500 and the Nasdaq Composite are also sliding, down 0.4 and 0.3%, respectively.
Just weeks after the social media giant lost a high-profile case in New Mexico, it will once again defend itself in court tomorrow -- this time, in California.
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29 states are suing Meta over child safety
Oral arguments begin Tuesday morning in a major, unified case brought by Attorneys General from 29 states. Led by California AG Rob Bonta, Meta is facing allegations that it knowingly fostered addictive behavior in teens and children.
Meta has denied wrongdoing and said that the case's "limited claims are unsubstantiated and their financial demands are vastly disproportionate."
Image source: Getty Images.
This follows Meta's recent loss in a similar case in New Mexico earlier this month. The company will be forced to pay $1 billion in damages and change some of its policies.
What a loss could mean for Meta and big tech
While losing the New Mexico case was undoubtedly damaging, a loss in the current case could be significantly more so -- and not just for Meta. Some in the industry are saying this could be a sort of "big tobacco moment" for big tech.
I think that risk is real. A loss in this case would have far-reaching consequences for Meta and social media companies across the board.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
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