BMO Capital reiterated its 'Market Perform' rating on Meta Platforms Inc. (NASDAQ: META) on Wednesday, maintaining a price target of $580 per share. The stock closed at $577.38 on Tuesday, aligning closely with the analyst’s valuation.
The firm’s assessment follows Meta’s agreement with 52 state attorneys general to resolve allegations related to child safety and compliance with the Children’s Online Privacy Protection Act (COPPA) on Facebook and Instagram. The settlement, valued up to $18 billion, is payable in annual installments over 10 years, with Meta responsible for 70% of the total unless competitors such as TikTok and YouTube adopt identical restrictions. Under the terms, TikTok and YouTube would each face penalties of $5.3 billion if they opt into similar agreements.
The potential maximum settlement for child safety violations on Facebook and Instagram could reach $16.68 billion, including $11.66 billion in guaranteed payments and up to $5.02 billion in contingent amounts. The agreement imposes structural changes to Meta’s platforms, including daily usage limits of up to two hours for minors, with the option to deactivate access via parental consent. Nighttime restrictions will block teen access between midnight and 6 AM, or between 10 PM and 7 AM if competitors implement comparable measures. Additional provisions include a school-mode feature that silences notifications between 8 AM and 3 PM and enhanced age verification to prevent minors from opening accounts.
Meta also faces potential penalties of up to $16.68 billion under the settlement framework, though the final amount remains contingent on the actions of other platforms. The company’s gross profit margin stands at 81.75%, reflecting its strong profitability despite regulatory pressures.
BMO Capital’s rating contrasts with more bullish outlooks from other analysts. Evercore ISI maintained an 'Outperform' rating with a $860 price target, while Bernstein SocGen Group assigned an 'Outperform' rating with a $800 target. Meta’s upcoming AI initiatives, including the rollout of the Hatch platform in the coming weeks and the Watermelon AI model scheduled for October, may further influence investor sentiment.
WhatsApp, a Meta subsidiary, introduced upgraded two-step verification security, replacing SMS-based systems with a full password requirement to enhance user protection.
