Meta Platforms’ stock price is declining due to news that its WhatsApp messaging platform will be subject to new regulations in the European Union. As of 2 p.m. ET on Wednesday, the share price dropped by 2%, with earlier fluctuations reaching as low as 2.9%. Despite this, Meta’s valuation remains up roughly 48.5% over the past year.
The WhatsApp platform now exceeds the 45 million user threshold required to fall under the European Union’s Digital Services Act, which will subject it to stricter content moderation and monitoring policies. This shift may lead to increased data privacy control for users but also close off some monetization opportunities for Meta.
While this regulatory change is unfavorable for Meta, it doesn’t significantly alter the company’s long-term outlook. As a messaging platform, content moderation costs are relatively low compared to other social media platforms. The company already deals with the large online platform designation for its Facebook and Instagram services in the EU.
National leaders of E.U. countries have suggested that the supranational organization may introduce more relaxed regulatory standards for the tech industry in the future. This could impact WhatsApp, but it’s unlikely to affect Meta within a year.
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Source: https://www.nasdaq.com/articles/why-meta-platforms-stock-slipping-today