News of a settlement in a massive lawsuit against Meta Platforms (NASDAQ:META) has the social media stock trading higher Wednesday.
Here’s why one expert says this is the right initial reaction, but there could be more trouble ahead.
• Meta Platforms shares are trending higher. Why are META shares climbing?
Gary Black on Meta Settlement
In recent weeks, Future Fund Managing Partner Gary Black has been among the voices speaking out about what massive lawsuits against Meta could mean for the company’s future and why shares could continue to underperform the S&P 500.
Black reacted to news of a settlement on social media Wednesday morning. (Note: Judge Yvonne Gonzalez Rogers needs to approve the proposed settlement, according to an NPR report.)
"$META +$% pre-mkt to $594 on reports that it has reached a $17B settlement over 10 years with the state attorneys general, thereby removing the chance of an existential adverse verdict that could have approached $1.4 trillion, equal to META’s market cap," Black tweeted.
Black said the odds of a verdict for $1.4 trillion being reached and upheld through appeal were low, but this marked a potential "overhang on the stock for months." With Wednesday’s settlement, Black says the overhang "has now been removed."
While the short-term overhang is removed, Black cautions that there could be more legal challenges ahead for Meta.
"This won’t eliminate potentially thousands of ongoing lawsuits from individuals for violating federal child privacy and consumer protection laws, but a settlement class action could be structured to remove those claims as well."
Black previously compared the Meta trial to “tobacco litigation” from 30 years ago.
“The potential for a trillion dollar initial judgment and an unfavorable appellate process before the liberal Ninth Circuit Court of Appeals could overhang the stock just like tobacco litigation impacted tobacco stocks for years,” Black tweeted.
Black said investors eventually realized tobacco companies could price future litigation into cigarette costs, ending the pressure on those stocks.
“Unlike tobacco stocks, there is no pricing mechanism that $META can use to offset the risk of litigation.”
The market expert says Meta could try and settle the latest case for a “few hundred billion dollars.” In that scenario, the stock could spike.
Still, Black noted that a potential settlement could trigger even more future litigation against Meta.
Meta’s Settlement
Meta’s settlement would see the company pay $17 billion to states over 10 years and make changes to its platform for minors, according to a report from NPR.
"Today, we have secured a settlement with Meta that will make social media less dangerous for our kids and make a world of difference for children and their families," California Attorney General Rob Bonta said in a statement.
Bonta called the changes from Meta agreed upon as "massive transformations" that will reduce the risk of harm on the company’s social media platforms.
Meta denied the allegations that it designed apps to be addictive, knew the risks of addictiveness and illegally collected data from minors.
The company’s Chief Legal Officer C.J. Mahoney said Meta’s changes will "empower parents to easily manage how their children across our platforms." Mahoney called out other social media companies such as TikTok and YouTube to adopt similar solutions.
Meta Stock Price Action
Meta stock is up 1.9% to $580.78 on Wednesday versus a 52-week trading range of $520.26 to $790.80. Shares hit an intraday high of $593.34 earlier Wednesday morning. Meta stock is down 10.7% year-to-date in 2026.
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