AAPW

$Tesla(TSLA.US) remains the worst YTD performer (-20%) of all Mag 8 stocks, with only $Meta Platforms(META.US) (-15% YTD) which is facing an existential threat to its core business given a $1.4 trillion consumer liability trial that got underway this week also in the red. NDX overall is up +16% YTD, fueled by $NVIDIA(NVDA.US) (+16%), $Apple(AAPL.US) (+15%.), and $Amazon(AMZN.US) (+12%). TSLA’s troubles are due to lower than expected auto gross margins in its core EV business and a slower than expected scale up of its unsupervised autonomy efforts due to efficacy and safety concerns/an abundance of caution.

Like tobacco litigation 30 years ago, $Meta Platforms(META.US) is being sued by California and a multi-state coalition of attorneys general who have argued that $Meta Platforms(META.US) designed Facebook and Instagram to be addictive to children and teens, improperly collected their data, and misled the public about the platforms' safety. The trial in federal court in Oakland before U.S. Judge Yvonne Gonzalez Rogers who was appointed by Barack Obama is likely to overhang the stock until the advisory jury renders a verdict in October. The advisory jury is hearing the evidence and issues a verdict; the judge is the ultimate decision-maker on liability, penalties, and remedies. On appeal, the case would go to the Ninth Circuit Court of Appeals, which is widely viewed as one of the more liberal circuits in the U.S. federal court system.

In the spring, Meta (along with $Alphabet(GOOGL.US) ‘s YouTube) lost a landmark social media case in California, in which a jury found the companies liable for harming a young user with certain design features in their apps and awarded her $6 million. Then, earlier this month, $Meta Platforms(META.US) was ordered to pay more than $940 million in the state of New Mexico for being a public nuisance and causing psychological harm to children. In the current state AG case in Oakland the plaintiffs are asking for compensatory and punitive damages which could total $1.4 trillion, essentially equal to META’s market cap.