Meta investors take wins now, forget about later

Childlike mind. It’s been a big week for Meta Platforms boss Mark Zuckerberg. On Wednesday, he testified in a congressional committee hearing on sexual exploitation of children on social-media platforms like Facebook and Instagram. next day, he announced on a quarterly earnings call that company would pay its first-ever dividend to shareholders. Excitement around artificial intelligence and a rebound in online vertising might be helping Meta’s stock extend last year’s 100%-plus rise. But tension with lawmakers suggests investors are underestimating bigger risks to come if Meta can’t prove its products are safe.

On Thursday company announced it me $40.1 billion in revenue, a 25% jump from same period last year and higher than analysts surveyed by LSEG expected. Zuckerberg touted company’s progress on AI and metaverse, areas he has suggested can benefit from technological synergies. news helped send shares more than 14% higher after market close.

And yet Meta has looming problems, which Senate hearing highlights. Last May, US Federal Tre Commission filed its third official complaint over Meta's privacy policies in an enforcement order that seeks to bar company from making money from children on its platform. In hearing Wednesday, South Carolina’s Senator Lindsey Graham told Zuckerberg he h “blood on his hands” as a result of interactions minors have h on his platforms.

Investors’ nonchalance to this backlash – on Wednesday and over past year – is rooted in some reality. Senators spent much of ir prepared remarks deflecting ir own responsibility back onto CEOs who were testifying, which also included Linda Yaccarino from X and Shou Zi Chew from TikTok. That’s perhaps because congressional legislation on topic in its current form, despite having bipartisan support, has not drummed up enough backing for Senate leer Chuck Schumer to bring to a vote. CEOs would be on solid ground in thinking that’s unlikely to happen soon. Indeed, Discord CEO Jason Citron was among CEOs testifying who didn’t even show up of ir own volition. Citron was compelled to attend hearing thanks to a personal subpoena served by US marshals.

Yet risks linger, particularly for Zuckerberg. Among or issues, tech leers have faced blowback over idea that, if y go snooping for b actors, user privacy might be compromised. That’s problematic for people who are meant to regulate company as well as, importantly, those that own stock. Users will leave platform if y feel safety is compromised – be it ir children’s or ir own. Plus social media firms like Meta are meant to be at cutting edge of technology. Suggesting that y can’t keep it clean is a poor reflection of ir software prowess.

Furr, this issue could soon become a political hot button, which will only get messier for Meta. It’s a b look for eir political party in an election year to exhibit dysfunction around such an important topic. That could make Meta a punching bag in upcoming US presidential election, especially as suburban voters in key areas drill down on issues that relate to families. Rhetorical backlash against Meta could become politically expedient, and a new Washington guard might take a much harder line. Right now, Meta’s shareholders are acting as if re is no risk at all.