Meta Platforms, Inc. (NASDAQ:META) is included in Mad Money’s latest recap as Jim Cramer outlined his strategy for market sell-offs. Cramer explained the possible outcomes of lawsuits against the company as he commented:
Alright, let me give you one more example, and this one’s more complex. The lawsuits brought by the typical class action lawyers to extract big money out of enterprises that may or may not be responsible for bad things. Meta lost two cases in a row last week, one in New Mexico, which said, among other things, that Meta prioritized profit over safety, and another in California that said, Meta and Google were negligent because they failed to warn users about the addictive nature of their platforms…
Both were tried in state, not federal courts. The marketplace doesn’t know how to handle lawsuits, so let me give you a little primer on what’s going to happen here. First, arguably, Meta lost about $200 billion in market capitalization of these verdicts… The California case made people think that Meta would now be a honeypot for any young person who can demonstrate social media addiction… There’s context to the messages, and that context will make it much easier for Meta to win these cases when it comes to appeal. Now, I know that these two losses were devastating to the shareholders who fled in droves, but I have followed these kinds of lawsuits all my life, and I can tell you that when these cases get to the federal courts… rather than in the states, there’s a very good chance it’s going to be overturned…
At the end of the day, when you sue social media companies for your depression… you’re going to eventually have to prove that it was Meta’s fault. Very hard to do… Meta can prove that it wasn’t the only precipitant… I know these two cases seem existential to the health of Meta, but before you begin to believe that, remember what happened with the stock of Johnson & Johnson in the talc cases… That’s why I thought the sell-off based on these lawsuits was strange, wrong, maybe even ridiculous.
Photo by Alexander Shatov on Unsplash
Meta Platforms, Inc. (NASDAQ:META) develops technologies and applications that connect people through social networking and messaging. The company’s portfolio includes Facebook, Instagram, WhatsApp, Messenger, Threads, and virtual and augmented reality products.
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