Meta’s Stock Outlook in Canada: Analyzing the Biggest Risk Confronting the Social Media Giant

META Stock Outlook: This Is the Biggest Risk Facing Meta Platforms Today

Meta Platforms, formerly known as Facebook, has been facing regulatory issues in multiple countries. There has been a tendency of the company to not comply with the law and guidelines in some situations. Despite the powerful rally of META stock, investors should be cautious as it appears to be overvalued and vulnerable to a pullback. This is mainly due to the company’s conflicts with regulators all over the world. The high GAAP trailing-12-month P/E ratio, along with the recent instances of regulatory friction that it is currently grappling with, pose a threat to META stock.

The Regulatory Battle for Meta Platforms

Meta Platforms’ CEO Mark Zuckerberg has recently declared 2023 to be a ‘year of efficiency’ and the firm’s management has been refusing to abide by local laws. The fines and sanctions levied upon Meta Platforms, such as the 1.2 billion euro data-privacy rule violation fine, demonstrate the company’s non-compliant policy. Such sanctions may potentially impact the future of the company.

The Federal Trade Commission, for example, is trying to impose new sanctions on Meta Platforms, and the Russian authorities have levied a fine on WhatsApp, which is owned by Meta Platforms, for not deleting banned content. Additionally, Meta Platforms has threatened to remove its news content in California over a proposed bill that would require tech companies to pay specific news providers. Meta Platforms’ management’s willingness to fight battles in multiple regions is not a good strategy in the long run and could prove to be expensive for the company.

Valuation Concerns for META Stock

As the shares of Meta Platforms have significantly increased in value this year, there are concerns regarding its valuation. The company’s non-compliant policy and ongoing litigations could further weigh down on the stock, making it vulnerable to a pullback. Value-focused investors should pay heed to the sector median GAAP trailing-12-month P/E ratio of 17.71x, which is much lower than META‘s P/E ratio of 33.88x. As a result, it makes sense to maintain a small position in META stock or none at all for now.

Final thoughts

Moving forward, it is essential to keep an eye on updates regarding Meta Platforms’ legal battles. Investors should consider the risks associated with META stock, and if they are willing to take these risks, they should maintain only a minimum position in this stock. It is better to be cautious while investing in META stock, especially when regulatory issues can arise in any region.