Meta, formerly Facebook, is feeling intense pressure financially from a $24.6 million lawsuit and failure to reach quarterly expectations after three consecutive quarters showing revenue decline.
Investors responded with a 25% drop in share price on Wednesday, October 26, losing nearly $78 billion of Meta’s market value. In total, Meta has seen a 60% drop in market value since the start of the year.
Just 16 months prior to the recent quarterly reports, Meta was valued at $1 trillion. However, each quarter has shown a successive decrease in company value.
Now, Meta — which owns Instagram, WhatsApp, and Facebook — is no longer a top 20 company, and it is worth about as much as Home Depot.
Analysts Debra Aho Williamson of Insider Intelligence blames the dip in Meta’s value on CEO Mark Zuckerberg’s commitment to the Metaverse, an online virtual reality platform that has faced ridicule.
“Mark Zuckerberg’s decision to focus his company on the future promise of the metaverse took his attention away from the unfortunate realities of today,” said Williamson.
At the same time, Meta faces a $24.6 million legal fine. On Wednesday, a Washington state judge ordered Meta to pay $24.6 million for repeatedly and intentionally “violating campaign finance disclosure law, the maximum penalty allowed for more than 800 violations of the law.”
King County Superior Court Judge Douglass Norh’s order maintains that Meta violated Washington’s Fair Campaign Practices Act of 1976.
The political transparency law requires political ads to display the names and addresses of those who purchase political ads, whom the ads target, and how the ads were paid for, along with the total number of views for each ad.
Moreover, ad sellers such as Meta must provide the information upon request.
Although television and newspapers have followed the law for decades, Meta objects to the Washington law, claiming it is a burden upon political speech.
NPR said this may be the “largest campaign finance penalty in U.S. history.”
Explaining why the fine neared $25 million, Washington Attorney General Bob Ferguson said this was not the first time Facebook has disregarded campaign finance disclosure policy.
In December 2018, Facebook was fined $238,500 by Washington State for “failing to maintain legally required information for Washington State political advertising placed on its online platform.”
Facebook responded by banning the sale of political ads. Allegedly, however, they continued to sell non-compliant ads. As a result, Ferguson sued again in 2020.
North assessed the maximum fine allowed under RW 42.17A for each of the 822 violations.
Under Washington law, each violation is subject to a $10,000 fine. However, the fine can be increased to $30,000 if the court finds the violations intentional.
“Meta was aware that its announced ‘ban’ would not, and did not, stop all such advertising from continuing to be displayed on its platform,” Judge North said.
Amidst turmoil, Zuckerberg encouraged stockholders to remain patient while acknowledging Meta’s challenges.
“There’s macroeconomic issues, there’s a lot of competition, there’s ads challenges, especially coming from Apple, and then there’s some of the longer-term things that we’re taking on, expenses, because we believe that they’re going to provide greater returns over time.”
Zuckerberg added, “I appreciate the patience, and I think that those who are patient and invest with us will be rewarded.”
With Meta struggling to maintain relevance, pay hefty legal fines, and keep investors happy, only time will tell whether Zuckerberg can reinvigorate the tech giant to its former status.
