tiprankstipranks
Facebook, Twitter Bow to New EU Rules
Market News

Facebook, Twitter Bow to New EU Rules

Story Highlights

The new EU code aims to tackle fake news by making the social media platforms responsible.

Meta Platforms Inc. (NASDAQ: META), which owns Facebook, Twitter Inc. (NYSE: TWTR), and some other major social media companies, agreed to follow more stringent European Union (EU) standards to tackle fake news.

Shares of both Meta and Twitter plunged 5.2% and 1.6% during yesterday’s trading session to close at $160.87 and $37.40, respectively.

Details of the New Rules

Under the new EU’s code of practice on disinformation, social media platforms such as Facebook and Twitter are expected to take steps to stop advertising from appearing alongside false or misleading information. Furthermore, platforms are expected by the EU to provide more tools to users to identify such fake content.

The EU said the aim of the new code is to prevent the propagators of fake news from profiting from these platforms and make it harder to find their content on the social media platforms.

The new code comes as a follow-up to the EU’s Digital Market Act earlier in the year. In fact, some portions of the new code are expected to be made obligatory for major platforms under this new law.

Management’s Take

Social media platforms have welcomed the new code. While Meta said the company would continue to use research and leverage technology to tackle the spread of false information, Twitter said it remained committed to thwarting the issue through the new code.

Stock Rating

Overall, the Wall Street community is cautiously optimistic about the Meta stock with a Moderate Buy consensus rating based on 27 Buys, seven Holds, and one Sell. The META average price target of $276.12 implies the stock has upside potential of 71.8% from current levels. Shares have declined 52.2% over the past year.

Meanwhile, consensus among analysts for Twitter stock is a Hold based on one Buy and 25 Holds. The TWTR average price target of $51.72 implies upside potential of 38.4% from current levels. Shares have declined 38.5% over the past year.

Conclusion

Regulatory concerns, especially in the EU, has been a bone of contention for all social media platforms. Furthermore, these issues seem unlikely to abate any time soon as lawmakers remain steadfast in their endeavor to keep these large and influential social media companies in check.

Read full Disclosure

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles