--- title: "Legal risks compounded with AI burning cash, Meta's market value evaporates by $280 billion, raising concerns similar to those in the tobacco industry" type: "News" locale: "en" url: "https://longbridge.com/en/news/281094989.md" description: "Meta Platforms Inc. saw its stock price plummet by 11% due to legal risks and a surge in artificial intelligence spending, with a cumulative decline of 17% this month. Investor concerns about uncontrolled spending have intensified, and the market is beginning to worry that Meta may face a contraction risk similar to that of the tobacco industry. While it is still too early to draw conclusions, Wall Street is assessing this possibility. Tim Ghriskey, an investment strategist at Ingalls & Snyder, stated that while he does not believe Meta is exactly like the tobacco industry, stranger things have happened in history" datetime: "2026-03-31T00:40:41.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/281094989.md) - [en](https://longbridge.com/en/news/281094989.md) - [zh-HK](https://longbridge.com/zh-HK/news/281094989.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/281094989.md) | [繁體中文](https://longbridge.com/zh-HK/news/281094989.md) # Legal risks compounded with AI burning cash, Meta's market value evaporates by $280 billion, raising concerns similar to those in the tobacco industry **At the beginning of the year, Meta Platforms Inc. appeared to be one of the best-performing large tech stocks in the market. However, concerns about legal risks and massive spending on artificial intelligence (AI) have increasingly surfaced, ultimately leading to an 11% drop in stock price last week.** The parent company of Facebook and Instagram has seen its stock price fall 17% this month, on track for its worst monthly performance since October 2022. At that time, Meta provided disappointing revenue guidance, and CEO Mark Zuckerberg urged investors to be patient with the company's ongoing expansion spending in the metaverse. Now, Meta is downplaying the metaverse concept and shifting its focus to artificial intelligence. However, market concerns about its uncontrolled spending have intensified. Additionally, following a New Mexico jury's ruling that Meta misled the state's youth about the safety of its social network, and Meta being held liable in a trial involving social media addiction alongside Alphabet, the survival risks facing the company have also increased. In March alone, Meta's market value shrank by $280 billion. While many believe it is too early to draw conclusions, Wall Street is now trying to assess the possibility that social media companies may face a contraction risk similar to that of the tobacco industry after stricter anti-smoking regulations were introduced. Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, stated, "I don't necessarily think this is the same as the tobacco industry, but stranger things have happened." The firm, which manages about $11 billion in assets, holds Meta stock. Ghriskey spent part of his early career researching the tobacco industry and has devoted considerable time to analyzing litigation risks. Ghriskey said, "Some might think that the only way to eliminate the negative impacts of social media is to shut down the entire industry. Clearly, that would be devastating for the companies." Evercore ISI analyst Mark Mahaney noted in a report to clients on March 26 that comparing Meta to the tobacco industry has become "a question investors keep asking us." "Is this Meta's 'Big Tobacco moment'? In other words, is Meta no longer worth investing in? That possibility exists, but we think it's unlikely." In fact, analysts have become more optimistic about Meta's long-term prospects this quarter. Over the past three months, market expectations for the company's earnings in 2027 have been raised by 2.4%, while revenue expectations have increased by 6.4%. The combination of upward revisions in earnings expectations and a declining stock price has made Meta the lowest-valued stock among the "Seven Giants." Its stock price is currently about 16 times the expected earnings for the next 12 months, marking the lowest valuation level since March 2023 Phil DeAngelo, Managing Director of Focused Wealth Management, stated that such relatively low valuations are sufficient to offset other factors that drag down stock prices. His firm holds Meta shares. DeAngelo, who assists in managing $2.3 billion in assets, said, "So far, the penalties have not been severe, and the company can mitigate the issues behind these lawsuits by adjusting new parameters, so I don't think this will have a negative drag like it did in the tobacco industry. Meanwhile, Meta has become extremely attractive, and the acceleration in revenue growth indicates that, despite the large scale of spending, it still knows how to convert these investments into profits." ### Related Stocks - [Direxion Daily META Bull 2X ETF (METU.US)](https://longbridge.com/en/quote/METU.US.md) - [Meta Platforms, Inc. 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