META stock fell 4% as a 29-state youth-harm trial opened in Oakland, with potential damages of $1.4 trillion rivaling its entire market cap. Pinterest (PINS) rose 3% and Snap (SNAP) gained 2% Tuesday, confirming Meta's selloff reflects company-specific legal and cost problems, not sector weakness. Meta's Q2 costs surged 55% against 28% revenue growth, cratering free cash flow to just $784 million from $8.55 billion a year earlier.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Meta didn't make the cut. Grab the names FREE today. Meta Platforms (NASDAQ:META) stock is down 4% to $548.14 in Tuesday morning trading as a 29-state youth-harm trial opens in Oakland.
Investors are reassessing a cost base growing far faster than revenue. Meanwhile, Pinterest (NYSE:PINS) stock is up 3% to $23.75. Snap (NYSE:SNAP) stock is up 2% to $5.30.
Alphabet (NASDAQ:GOOGL) stock is down 0.2% to $343.42, and the Communication Services Select Sector SPDR Fund (NYSEARCA:XLC) is up 0.3% to $111.18. The NASDAQ 100 fell more than 1% in early Tuesday trading and the Philadelphia Semiconductor Index fell more than 5% explains part of Meta Platforms' decline. Yet, the stock fell far more than Alphabet stock and more than the sector fund, which rose, signaling a company-specific overhang.
Judge Yvonne Gonzalez Rogers is presiding over the bellwether case against Meta Platforms in the U.S. District Court for the Northern District of California, stemming from a suit filed by 29 states in 2023. California, Colorado, Kentucky and New Jersey are participating, and testimony is expected from CEO Mark Zuckerberg and Instagram CEO Adam Mosseri.
Plaintiffs claim Meta Platforms "developed and refined a set of psychologically manipulative platform features designed to maximize young users' time spent on its social media platforms," citing infinite scroll, autoplay and likes. States also allege violations of the Children's Online Privacy Protection Act for allowing children under 13 on the platform without parental consent. Damages are the pressure point.
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