Skip to content

Meta stock drops over 4% despite DOJ settling landmark suit

Meta stock drops over 4% despite DOJ settling landmark suit
Dino Kurbegovic

The Justice Department (DOJ) announced on Tuesday, June 21, that it has settled with Meta Platforms (NASDAQ: META), formerly known as Facebook, in a lawsuit over a violation of the Fair Housing Act. The investigation that preceded the settlement was started in 2019 from a discrimination charge by the Department of Housing and Urban Development.  

This case represented the first DOJ case to challenge “algorithmic discrimination”, or unfair treatment across a system. According to the lawsuit, Meta’s housing advertising system discriminated against users based on race, color, religion, sex, disability, familial status, and national origin. 

Meanwhile, shares of the company ended the trading session down over 4%, despite the settlement, which will force Meta to pay a fine of $115,000 and develop a new system for housing ads.  

META chart and analysis

META shares have seen a precipitous decline since February of 2022, with high sell volumes coming in. Currently, the shares are trading below all daily Simple Moving Averages (SMAs), on slightly elevated trading volumes compared to the averages. 

META 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

On the other hand, analysts on Wall Street rate the shares a strong buy, predicting that in the next 12 months, the average price will be $273.85, which is 75.01% higher than the current trading price of $157.05.

Wall Street META analysts’ price targets for META. Source: TipRanks

Discriminatory practices

Moreover, the U.S. officials have long accused Meta of discriminatory ad practices, with the secretary of the U.S. Department of Housing and Urban Development at the time, Ben Carson, launching a formal complaint in 2018 against Facebook’s ad systems. For the time being, the company addressed the new changes to their ad system in a blog post

“With more than a year of collaboration with HUD to develop a novel use of machine learning technology that will work to ensure the age, gender, and estimated race or ethnicity of a housing ad’s overall audience matches the age, gender and estimated race or ethnicity mix of the population eligible to see that ad.”

Despite this settlement, Meta’s legal woes are seemingly not over. Last week, the company was sued in a class-action case alleging that medical data is secretly sent to its core Facebook unit. 

Whether these settlements and suits will lead to significant changes in the business models that made Meta successful is yet unknown. Still, there seem to be potential risks for the company in the medium to long term.  

Buy stocks now with Interactive Broker – the most advanced investment platform


Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in 70+ cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Read Next:

Weekly Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Disclaimer: The information on this website is for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. This site does not make any financial promotions, and all content is strictly informational. By using this site, you agree to our full disclaimer and terms of use. For more information, please read our complete Global Disclaimer.