Meta Platforms (NASDAQ:META) is heavily exposed to legal and regulatory headwinds. Recently, Ireland’s Data Protection Commission slapped a $414 million fine on META for its advertising practices. The decision was undoubtedly challenged by Meta, who plans to appeal it.
The EU’s (European Union) top privacy watchdog said that Meta breached the General Data Protection Regulation. Meta gained permission from its users to accept personalized ads in its terms of service on its Instagram and Facebook platforms. The privacy regulator sees this as a violation and has given Meta three months to comply with the EU’s privacy laws.
It’s worth highlighting that legal and regulatory hurdles are not new to Meta. In October 2022, the U.K.’s Competition and Markets Authority (CMA) asked the social media company to sell GIPHY, its GIF-sharing platform, due to competition concerns.
Needham analyst Laura Martin said in a note to investors that there’s always a “new negative regulatory headline” for Meta. She added that these headwinds hurt Meta’s reputation among users. Meanwhile, Monness analyst Brian White said that “regulatory headwinds persist” for META.
Our data shows that legal & regulatory risks account for 21.3% of Meta’s total risks. However, what stands out is that Meta’s legal & regulatory risks are higher than the sector average of 15.3%.
Is Meta a Buy, Sell, or Hold?
Given the regulatory challenges and competitive headwinds, META stock has a Moderate Buy consensus rating on TipRanks. It has received 28 Buys, eight Holds, and three Sells. Further, analysts’ average price target of $147.89 implies 16.11% upside potential.