tech
Cramer says Meta is not the new tobacco, warns against selling over social media court rulings
Jim Cramer dismisses Meta's underperformance amid child safety litigation — and instead, considers whether to buy more shares.
TL;DR
- Meta shares fell over 8% after a jury found the company negligent in a case of childhood social media addiction, awarding $6 million in damages.
- A separate New Mexico jury held Meta liable for $375 million in civil damages for violating consumer protection laws; Meta plans to appeal both rulings.
- Jim Cramer compares the situation to tobacco litigation but argues tech companies have been more transparent about platform risks, making Meta unlike 'Big Tobacco'.
- Cramer sees the stock's decline as a potential buying opportunity, citing forward P/E estimates that are below its five-year average.
- Legal challenges could test Section 230 protections, but Bank of America estimates teen users constitute only about 1% of Meta's revenue.
- Meta is investing heavily in AI infrastructure, with expected capital expenditures between $115 billion and $135 billion this year.
- The company recently announced hundreds of layoffs, which Cramer frames as cost-tightening during uncertain economic times.
- The CNBC Investing Club maintains a buy-equivalent rating on Meta with an $825-per-share price target.