Impact of the Trade Conflict on Meta
The trade war leads to uncertainties in the global economic situation and negatively affects the advertising revenues of companies like Meta. Despite a strong growth in advertising revenues in 2024 by 22 percent to 160 billion USD and an increase in profits by 60 percent, there has been significant stock volatility in recent months. In the last month, the stock recorded a decline of over 10 percent, indicating increasing uncertainties due to geopolitical tensions.
Regulatory Burdens
In addition to the trade conflict, Meta faces significant regulatory challenges:
- The European Union is planning a fine of up to one billion USD due to alleged violations of the Digital Markets Act. The “Pay or Consent” model, where users must either pay for an ad-free experience or consent to data usage for targeted advertising, is under scrutiny. This model is considered potentially anti-competitive.
- In the USA, an antitrust case is ongoing regarding the acquisitions of Instagram and WhatsApp by the Federal Trade Commission (FTC), adding further pressure to the company.
Stock Price Development and Analyst Expectations
As of the end of March/early April 2025, the stock price is around 600 USD with short-term downward fluctuations. Analysts expect earnings per share of about 24.9 USD for 2025. Despite the current headwinds, there remains a certain growth potential in the long term, especially due to Meta’s focus on artificial intelligence to strengthen its advertising business.
Importance for Investors
These developments are highly relevant for retail investors and small shareholders:
- The combination of geopolitical risks (trade wars) and regulatory headwinds may lead to short-term losses in stock prices.
- Long-term opportunities still exist due to Meta’s strong market position in online advertising and innovations in AI.
- Cautious monitoring of further political developments and regulatory decisions is crucial.
Investors should critically review their positions and consider applying risk management strategies or seeking professional advice.
In summary, the trade war between the USA and China significantly burdens Meta due to the threat of billion-dollar losses in its core online advertising business. At the same time, regulatory proceedings in Europe and the USA further exacerbate the situation. These factors lead to increased volatility in the stock, which poses both risks and opportunities for investors.