As Meta Platforms, Inc. (NASDAQ: META) stock experienced mixed reactions following the settlement of a major multistate lawsuit over alleged harms to young users on Wednesday, Jim Cramer, said this company’s stock is ‘hated and despised’.
This popular host of CNBC’s Mad Money, has expressed surprise that META stock failed to immediately rally after the company settled the case for around $17 billion. Cramer noted that the deal takes a massive ‘existential legal risk off the table’. As such, he believes that META stock should be viewed as a clear win.
“Meta goes negative: this is one hated stock.. I mean like despised. The big existential loss is off the table; the plaintiffs bar is likely to fold.. This was a huge win. Shocked it doesn’t matter,” Cramer highlighted in an X post on August 26.
He argued that Meta stock experiences deep negative sentiment from investors despite the company’s favorable legal outcome. Previously, the federal trial brought by California, Colorado, Kentucky, and New Jersey was seeking a fine of between $200 billion and $1.4 trillion, for Meta’s addictive features that harmed young users’ mental health.
With Meta’s current market capitalization of approximately $1.5 trillion, Cramer believes that the closing of the case is a huge win. Furthermore, Meta is expected to pay $1.3 billion a year instead of $100 billion a year to the 29 states that filed the case.
“It is important to note that when Meta doesn’t react to something they will owe $1.3 billion a year–drop in the bucket–instead of $100 billion a year–and it doesn’t matter, that stock is considered odious,” Cramer added.
Meta stock forecast following case settlement
Following the settlement, Mark Mahaney, an analyst at Evercore ISI, reiterated a ‘Buy’ rating for Meta. He maintained the firm’s 12-month price target of META at $860, implying a potential 46.7% upside.
Evercore ISI based the bullish outlook on the fact that the settlement removes a key legal overhang, although other lawsuits remain outstanding. As such, 43 analysts surveyed by TipRanks have set an average 12-month price target of $753.41, signaling a possible 30.94% uptick.
Market performance
Year-to-date (YTD) META stock has fallen 11.64%, trading at roughly $574.73 at the time of writing.
However, Wall Street analysts believe that META’s price could rally towards its all-time high over the next 12 months following this case settlement.
Featured image via Shutterstock
