Gene Munster on Meta Stock Slide: Teen Safety, Social Media Addiction Woes Are Just the 'Tip of The Iceberg'

Deepwater Asset Management‘s Gene Munster said Meta Platforms Inc.‘s (NASDAQ:META) mounting legal troubles over teen safety and social media addiction is minor compared to what he expects the company to face within the next year, as the stock slides amid the ongoing trial.

What’s ‘Around the Corner’

“What’s going on with $META today (down 4.4% vs. the Nasdaq down 1.3%) around the states, teen safety, and social media addiction is just the tip of the iceberg compared with what’s around the corner,” Munster said on X, adding that he expects this to play out within the next year.

Speaking on CNBC, Munster said Meta could likely absorb roughly $25 billion in fines over five years, given its projected annual cash flow of $40 billion to $60 billion, calling the hit manageable.

Meta shares have fallen 16.41% year-to-date and 29.15% over the past year, while the Nasdaq has gained 13.14% and 21.54% over the same periods, respectively.

Meta Faces $1.4T in Potential Damages

Opening statements began Tuesday in a federal trial in Oakland, California, where attorneys general from four states allege Meta engineered Facebook and Instagram to be addictive to teens while misrepresenting their safety, part of a broader case brought by 29 states.

Meta disclosed in a court filing that penalties under the states’ methodology could reach $1.4 trillion, though it called the figure “unsupported by the evidence,” with lawyers for the states signaling the ask will likely land closer to $200 billion.

The trial follows a loss for Meta in New Mexico, where a jury ordered it to pay $375 million, with a judge later directing another $567 million into an abatement fund that Meta plans to appeal.

The Real Risk Is Meta’s Shift to ‘Super Bots’

The bigger risk, Munster said, lies in CEO Mark Zuckerberg‘s push toward agent-based artificial intelligence products, which he said will dramatically expand Meta’s influence over users, including minors.

“If Zuck makes good on fulfilling this promise of super bots, what we’re seeing right now today is really chump change,” Munster said, adding that future lawsuits could be “dramatically bigger.”

Zuckerberg told investors during the company’s July earnings call that the shift toward agent-based products would change its revenue lines, positioning agents as the foundation of its next phase of growth.

Price Action: Meta’s shares closed 4.45% lower on Tuesday at $543.67 and gained 0.17% in extended trading.

Benzinga edge rankings indicate Meta’s stock has a Momentum score in the 10th percentile and a Growth score in the 77th percentile.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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