Meta’s $18B Teen-Safety Settlement: Analyst Says Fears Of ‘Tobacco Moment’ Have Largely Gone Up In Smoke

• Rosenblatt raised its price target on Meta to $886 from $883 and maintained a ‘Buy’ rating.
• Truist said the agreement will not have a material impact on user engagement as teenagers account for less than 1% of Meta’s revenue and spending.
• UBS viewed the agreement as ‘less punitive than feared.’

Meta Platforms (META) remained in the spotlight on Thursday after its landmark teen-safety settlement drew a positive response from Wall Street, with analysts saying the deal removes a major legal overhang at a far lower cost than investors had feared.

At the time of writing, META shares edged 0.8% lower, nearly 30% below the record of around $796 seen in August last year.

‘Tobacco Moment’ Fears Blow Up In Smoke

Rosenblatt raised its price target on Meta to $886 from $883 and maintained a ‘Buy’ rating, according to Investing.com. This represents a 55% upside over the current levels.

The firm called the settlement a significant win for Meta, noting that the roughly $18 billion maximum payment represents only about 1% of Meta’s market value. Before the deal, discussions had centered on potential damages of $200 billion based on the states’ case and as much as $1.4 trillion under Meta’s interpretation of their claims.

Rosenblatt said fears that the case could become a “Tobacco Moment” for Meta and the wider social-media industry have largely gone up in smoke, adding that investors can now turn their attention to the company’s advertising growth and AI spending.

UBS Says Settlement Is ‘Less Punitive Than Feared’

The proposed settlement resolves allegations that Facebook and Instagram encouraged compulsive use among children and teenagers while misleading the public about safety risks.

Meta will guarantee roughly $12.7 billion in payments over 10 years, and another $5.3 billion is conditional on rivals YouTube and TikTok adopting comparable safeguards and making matching payments.

As part of the settlement, Meta will also introduce stricter safeguards on Facebook and Instagram, including a default daily limit of two hours for users under 18. The payments will be spread over 10 years.

Truist lowered its target to $763 from $770 but retained a ‘Buy’ rating, saying the agreement will not have a material impact on user engagement as teenagers account for less than 1% of Meta’s revenue and spending. 

Meanwhile, UBS viewed the agreement as “less punitive than feared,” adding that similar restrictions on YouTube and TikTok could prevent Meta from suffering any meaningful disadvantage in engagement.

META Bulls Eye $700

Retail sentiment surrounding META on Stocktwits remained ‘bullish’ over the past 24 hours.

One user said the stock could climb to $700 by the next earnings report, implying a potential upside of around 23%

The stock has declined more than 12% so far this year.

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