Analysts at Jefferies say that while regulatory scrutiny may affect Meta Platforms Inc (NASDAQ:META, XETRA:FB2A, SIX:FB), the company could still present attractive long-term investment opportunities.
In a note to clients, Jefferies highlighted that concerns around regulatory and court-related issues have been persistent for years and may not be as severe as feared.
“The impact is likely more pronounced for Meta than Alphabet, given Meta’s greater exposure to social channels,” the analysts wrote, referencing the company’s flagship platforms, Facebook and Instagram. Meta already restricts access to users under the age of 13 globally.
Meta’s biggest regulatory challenges center on privacy, competition, and content moderation, particularly in the European Union, where laws such as the Digital Markets Act and Digital Services Act could require changes to its ad targeting, user consent flows, and handling of harmful or illegal content.
Jefferies emphasized that these regulatory fears do not equate to a “Big Tobacco” moment for social media, noting that platforms like Meta continue to provide social benefits to users.
However, the analysts cautioned that broader economic conditions remain a bigger risk. Advertising spend, a key revenue driver for Meta, is closely linked to GDP growth. Jefferies pointed to ongoing geopolitical tensions, including the war in Iran, as potential headwinds that could affect the company’s growth and earnings, especially as it continues to invest heavily in artificial intelligence initiatives.
From a valuation standpoint, Meta currently trades at approximately 15 times projected 2027 earnings per share, roughly three turns below its five-year average. Shares traded at $535 on Monay afternoon, down about 19% so far this year.
Jefferies wrote that this suggests many of the regulatory concerns may already be reflected in the stock price. If macroeconomic conditions improve and Meta delivers on its AI ambitions, the stock could see a meaningful rerating.