U.S. tech giant Meta’s (META) shares continued to rise only marginally early Monday. This came as allegations that it concealed the harmful effects of Facebook and Instagram became public, weighing on analyst praise for its social media “dominance” and AI advancement.
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Meta Responds to Mental Health Controversy
A newly unredacted document in a class action lawsuit initiated by school districts in the U.S. alleged that Meta’s Project Mercy was shelved after the research project found that users who left the apps for a week felt less strain tied to mood and peer pressure. Meta has said it abandoned the project due to weak methods and pointed to its efforts to improve the safety of teenagers on its platform.
Yet, Meta’s counter was not enough to significantly lift its stock price. META only rose about 0.96% to $599.96 per share, as of 7:32 a.m. EST on Monday, adding only fractionally to the 0.87% gain posted on Friday.
Analysts Cheer Social Media Lead and AI
Amid the controversy, BNP Paribas Exane analyst Nick Jones kicked off the equity research firm’s coverage of META stock with an Outperform (Buy) rating and a price target of $800, representing about 35% upside potential.
According to Jones, Meta is “only getting better at monetizing” its three billion-strong user base. The analyst also pointed to Meta’s aggressive investment in AI, adding that the company can ride on its social media “dominance” to stay ahead in the social media marketing race.
Adding to the AI comment, Citizens analyst Andrew Boone praised the launch of Segment Anything Model 3, Meta’s latest AI for visual understanding. The introduction follows the California-based tech giant’s recent partnership with semiconductor company Arm Holdings (ARM) to revamp its AI setup.
Boone expects advancements to the model — the model understands objects in images and videos better and can annotate five times faster than humans — to help improve user engagement and ad performance on Meta’s social media platforms. The five-star analyst reaffirmed his Market Outperform (Buy) rating on META and maintained his price target of $900, implying about 51% upside from the shares’ closing price on Friday.
Is Meta a Good Stock to Buy Now?
Across the broader Wall Street, analysts remain very upbeat about Meta and have a Strong Buy consensus rating on its shares. This is based on 35 Buys, six Holds, and one Sell assigned by 42 analysts over the past three months.
Moreover, the average META price target of $838.14 indicates about 41% upside from the current trading level.
