Meta stock rallies as investors shrug off antitrust lawsuit

Meta stock's price (META) crept higher as investors shrugged off the social media giant’s ongoing antitrust saga with federal regulators.

Meta stock rose 1.5% to close at $573.54 on the Nasdaq Stock Exchange yesterday and is slightly up in pre-market trading today. This puts Meta Platforms about 5% below its all-time high, after rallying nearly 60% in 2024.

At the current price, Meta Platforms has a total market capitalization of $2 trillion, placing it seventh among the world’s largest companies.

Meta stock has rallied despite an ongoing antitrust investigation by the Federal Trade Commission (FTC), which accuses the company of violating U.S. antitrust laws to maintain its dominance in social media.

The FTC specifically scrutinized Meta’s acquisitions of Instagram and WhatsApp, arguing that the company overpaid to suppress competition and strengthen its monopoly under CEO Mark Zuckerberg.

On Tuesday, federal Judge James Boasberg set a trial date of April 14, 2025.

The judge's decision dismissed Meta’s argument that the case should be dropped because the social media industry is ripe with competition from YouTube, LinkedIn, and X.

That being said, the FTC’s case against Meta is far from a slam dunk. Boasberg told the agency that “time and technological change pose serious challenges” to its definition of social media.

In the meantime, Meta continues to operate a thriving business and is incorporating AI to generate more content and boost advertising revenue.

Meta stock's top and bottom lines are stellar

Meta Platforms' rally has been fueled by stellar quarterly earnings, highlighted by a Q3 report with robust top- and bottom-line results."

The social media king grew its revenues by 19% to $40.6 billion during the quarter as per-share earnings improved to $6.03. Both figures were well above Wall Street’s consensus forecasts.

Meta’s daily active users across all platforms rose by 5% to 3.31 billion.

Despite pouring tens of billions of dollars into infrastructure development, the company is maintaining strong profitability. For fiscal 2024, Meta expects to dole out between $38 billion and $40 billion on capital expenditures, including AI investments.

Meta has already spent billions of dollars on Nvidia’s graphics processing units.

The good news is all those expenditures are starting to bear fruit. Zuckerberg told investors in October that more than one million advertisers have already used Meta’s generative AI advertising tools.

Advertising revenue isn’t slowing down, either. The company’s ad sales came in at $39.9 billion in the third quarter, an 18.7% increase over the year. Advertising accounts for more than 98% of Meta’s revenue.

Analysts say Meta’s booming ad business supports its current valuation. The stock trades at 25 times expected earnings, above its three-year average P/E of 17.

This aligns with the typical earnings multiple for companies listed on the tech-heavy Nasdaq.