Earnings
Home›Earnings›Previews›Meta legal risk could outsize Q2 earnings impact
Meta legal risk could outsize Q2 earnings impact
Meta reported $2.4 billion in Q2 legal expenses, and plaintiffs in multi state cases are seeking damages up to $1.4 trillion, which could force changes to how Facebook and Instagram are designed for minors.
Meta Platforms is warning that legal expenses could remain a major earnings overhang after its latest quarter, according to MarketBeat Ratings. The outlet pointed to $2.4 billion of legal expenses in Q2, which it said weighed on results by helping drive Meta to miss reported EPS estimates by roughly $1.
MarketBeat Ratings also highlighted a set of multi state challenges tied to allegations that Meta designed Facebook and Instagram to be addictive to children. It said a California court is expected to hold a trial lasting about two months, and that additional claims from 29 states will be examined regarding alleged illegal collection and use of children’s data.
The outlet said plaintiffs are seeking damages of up to $1.4 trillion, describing the amount as extremely large relative to Meta’s size. It also noted that the trial outcome could require app changes, including limiting minors’ ability to scroll indefinitely.
MarketBeat Ratings argued that even if Meta were to pay only a smaller portion of the damages sought, the impact could still be significant relative to recent legal spending and other budget items. As an illustrative comparison, it cited a 1998 tobacco settlement of $206 billion and noted that adjusted for inflation it would be far below $1.4 trillion, while still underscoring how large legal outcomes can be.