In This Article:
What Happened?
Shares of social network operator Meta Platforms (NASDAQ:META) fell 5% in the afternoon session as markets remained anxious about the negative impact of tariffs, with concerns intensifying following new updates from the Trump administration. Treasury Secretary Scott Bessent noted on CNBC, "We're focused on the real economy.... I'm not concerned about a little bit of volatility over three weeks." Adding to the concerns, President Trump announced on Truth Social that his administration was considering imposing a 200% tariff on all alcoholic beverages imported from European Union countries. This move was in response to the EU's 50% tariff on whisky. Trump added, "This will be great for the Wine and Champagne businesses in the U.S."
The shares closed the day at $590.77, down 4.6% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Meta? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Meta’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 17.2% on the news that the company reported weak first-quarter results with revenue guidance for the next quarter, missing analysts' expectations. Meta also raised its forecasted operating expenses and capital expenditures for the full year. The increased costs are related to the company's AI infrastructure.
On the other hand, Meta delivered solid revenue, operating profit, and EPS growth, which beat analysts' estimates. During the quarter, Meta released its AI assistant, Meta AI. This product was rolled out across its family of apps and is powered by Llama 3, an open-source large language model that is a ChatGPT competitor. Overall, this quarter's print was solid, but the weaker expected revenue for next quarter and higher expenses for the full year spooked investors.
Meta is down 1% since the beginning of the year, and at $593.02 per share, it is trading 19.5% below its 52-week high of $736.67 from February 2025. Investors who bought $1,000 worth of Meta’s shares 5 years ago would now be looking at an investment worth $3,483.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. We prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.