Some investors might be concerned over Meta Platforms’ recently settling a lawsuit over suspending President Donald Trump from Facebook and Instagram during most of former President Joe Biden’s presidency. It’s another step in Mark Zuckerberg’s apparent plan to move from the past and let bygones be bygones as he warms up to the Trump administration.
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However, it’s possible that the settlement creates an opportunity for others who were suspended on the platform to sue in turn. Some people may think that the lawsuit could trigger pressure on the stock price, but it’s likely an unwarranted fear for long-term investors.
Can This Settlement Lead to More Lawsuits?
Ben Michael is a criminal defense attorney at Michael & Associates. He believes the settlement can generate more legal activity, but that doesn’t necessarily mean it will be material.
“This settlement could absolutely lead to more people filing lawsuits against the company. Precedent is everything when it comes to the law, so if people see a case like this and believe they were treated the same way by the company, they may choose to pursue legal action in order to receive a similar outcome,” he explained.
“Of course,” he added, “that doesn’t necessarily mean that people are going to have success in doing this. By nature of celebrity, power and money, Trump is a much different plaintiff than the average person in cases like these.”
Meta Platforms may have also felt the urge to get this lawsuit out of the way to avoid any public backlash. The company had a strong incentive to get this legal matter out of the way as quickly and quietly as possible. Meta Platforms regularly juggles multiple lawsuits, as do most publicly traded corporations, so any future cases likely won’t result in a swift conclusion like Trump’s lawsuit.
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What Will Happen to the Stock Price?
The lawsuit settlement isn’t likely to have much, if any, impact on Meta Platforms’ price. The company regularly deals with lawsuits, and any short-term dips related to this news can present a long-term buying opportunity.
It’s also important to note how small the lawsuit settlement was compared to Meta Platforms’ financials. The social media giant paid $25 million to settle the lawsuit. It’s an inconsequential number compared to the $62.9 billion in net income that the company earned in fiscal year 2024.
Meta Platforms is also on track for revenue growth in 2025. The company is currently projecting $39.5 billion to $41.8 billion in Q1 2025 revenue. The company is still expected to grow, and lawsuits of this nature are unlikely to play a role in the stock price. If anything, they can cause short-term panic that presents a buying opportunity, but even that is unlikely.
Meta Platforms stock has been on a tremendous winning streak that started on Jan. 17 and has extended into February. The stock is approaching one month of consecutive green days, showing that investors are more interested in the company’s business than its legal matters.
Is Meta Platforms Stock a Buy?
Investors should always conduct their research and assess their risk tolerances before buying any stock. Meta Platforms caters to growth investors who want exposure to the company’s ad business. The tech giant has made big AI investments, which could translate into new business segments in the future, but almost all of its revenue currently comes from ads.
Meta Platforms has delivered solid growth rates for many years. The company wrapped up fiscal year 2024 with 22% year-over-year revenue growth and 59% year-over-year net income growth. Meta Platforms also closed out the year with a 37.9% net profit margin. Meta Platforms has strong financials, enticing growth opportunities and a reasonable valuation that may warrant a closer look from long-term investors.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Meta Settled Trump Lawsuit — What Will Happen to Its Stock Price?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
