Meta Stock Slides 19% as AI Spending Spook Investors
$310 billion wiped out amid lawsuits and rising capex concerns
- Meta Platforms shares fall 19% in March
- $310 billion market value erased amid legal setbacks
- AI spending surge raises investor concerns
- Analysts divided despite strong long-term outlook
GG News Bureau
New York, 31st March: Shares of Meta Platforms have come under intense pressure, falling 19% this month and wiping out nearly $310 billion in market value, as investors react to mounting legal risks and aggressive spending on artificial intelligence.
The stock suffered an 11% rout last week, marking its worst performance since October 2022, when concerns over metaverse investments had rattled markets.
Investor sentiment has weakened sharply following a US court verdict in New Mexico that found Meta liable for misleading teenagers about the safety of its platforms. The company, along with Alphabet Inc., was also held accountable in a case related to social media addiction.
The rulings have sparked fears that social media firms could face regulatory and legal pressures similar to those once seen in the tobacco industry.
At the same time, Meta’s heavy investment in AI infrastructure has added to concerns. The company’s capital expenditure is projected to surge to over $123 billion this year, while free cash flow is expected to shrink sharply.
Despite strong revenue growth projections of around 25% this year, investors are increasingly wary of the sustainability of such spending.
Legal challenges are expected to continue, with multiple cases lined up in US courts, potentially forcing companies like Meta to redesign their platforms or settle claims.
The stock is now down 33% from its all-time high and is underperforming the broader tech-heavy indices.
However, Wall Street remains largely optimistic. A majority of analysts still rate the stock as a “buy,” citing its strong revenue potential and relatively low valuation compared to other major tech companies.
Some investors argue that Meta’s current valuation reflects the risks and presents an attractive entry point, especially as the company continues to monetise its AI investments.
Still, the combination of legal uncertainty and rising costs is likely to keep the stock volatile in the near term.
