A group of investors is suing Meta (META) CEO Mark Zuckerberg, along with other current and former company leaders, for $8 billion in damages. The lawsuit, which just began, is connected to the 2018 Cambridge Analytica scandal, where the political consulting firm gained access to Facebook user data. Investors claim that Meta didn’t fully warn them about the risk of user information being misused and argue that the company violated a 2012 agreement with the Federal Trade Commission (FTC), which required Facebook to stop collecting and sharing user data without permission.
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The lawsuit also says that Facebook went on to sell user data to commercial partners, despite the FTC agreement, and removed key privacy disclosures from its settings. These violations led to serious consequences, including a $5.1 billion fine from the FTC, more penalties in Europe, and a $725 million settlement with Facebook users. Now, shareholders want Zuckerberg and others to personally pay Meta back for those costs — estimated at more than $8 billion — instead of the company and its investors covering the damages.
The trial is taking place in Delaware Chancery Court, where Meta is incorporated, and is expected to last eight days. Testimony is set to include Zuckerberg, former COO Sheryl Sandberg, board member Marc Andreessen, and former board member Peter Thiel. The first witness, privacy expert Neil Richards, testified that Facebook misled users about its privacy practices, although he admitted that he couldn’t confirm a direct FTC violation. Meta attempted to have the case dismissed all the way up to the Supreme Court, but the justices upheld a lower court ruling, which allowed the lawsuit to proceed. A final decision is expected in the coming months.
Is Meta a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 41 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average META price target of $735.45 per share implies that shares are near fair value.
