Meta Platforms Inc. (NASDAQ:META) is facing mounting pressure as a landmark trial over alleged harm to children sends its stock lower, prompting sharply critical comments from investors Ross Gerber and Jim Cramer.
Meta Stock Falls as Landmark Child Safety Trial Begins
The decline came as a federal trial began in Oakland, California, where four states—California, Colorado, Kentucky and New Jersey—are leading a broader case involving 29 states that accuse Meta of deliberately designing Facebook and Instagram to encourage addictive use among young people.
The states allege Meta prioritized engagement and profits despite knowing about potential risks to children’s mental health.
Cramer said on X that the trial is being held in a district he considers particularly unfavorable to corporate defendants, arguing that this is contributing to the stock’s decline.
"Meta trial in the worst possible district for corporate defendants, hence why the stock is being hammered," Cramer wrote, while adding that although the case could be strong enough to succeed, it "might not survive a Supreme Court review."
Ross Gerber Slams Meta Over Alleged Harm to Kids
Gerber took a considerably harsher stance, accusing Meta of knowingly exploiting a product that allegedly causes mental health problems among children.
"It’s time for Meta to pay the piper," Gerber wrote on X, accusing the company of designing and exploiting its products while knowing about potential risks to children.
He also criticized Meta over the broader effects of social media and alleged extremist propaganda and foreign manipulation on its platforms.
"It’s time Zuckerberg and Meta pay for what they’ve done," Gerber stated.
Meta Faces Potentially Massive Penalties
The states’ case focuses on product design, including features such as infinite scrolling, personalized recommendations and social feedback mechanisms, rather than simply holding Meta responsible for content posted by users.
The states have discussed damages potentially reaching hundreds of billions of dollars, while Meta has highlighted a maximum calculation of roughly $1.4 trillion.
Meta denies the allegations and says it has implemented safeguards to protect young users.
Price Action: Meta Platforms closed at $543.67 on Tuesday, down 4.45%. The stock rose 0.17% to $544.61 in after-hours trading, according to Benzinga Pro.
According to Benzinga Edge Stock Rankings, Meta ranks in the 77th percentile for Growth, but the stock has underperformed across the short, medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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