Image Source: Pixabay

Meta Platforms (Nasdaq: META) got a dose of good news last week when a federal judge ruled in its favor on an antitrust suit filed five years ago by the U.S. Federal Trade Commission.

The FTC charged Facebook, owned by Meta, with “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.”

The FTC alleged that Facebook engaged in a strategy of buying up its rivals, including the 2012 acquisition of Instagram and the 2014 acquisition of WhatsApp, while imposing “anticompetitive conditions on software developers” to maintain its monopoly. To break the monopoly, FTV lawyers urged the judge to order that both Instagram and WhatsApp be spun off into separate companies.

But on November 18, Judge James Boasberg in the US District Court for Washington DC, sided with Facebook and Meta.

“The landscape that existed only five years ago when the Federal Trade Commission brought this antitrust suit has changed markedly. While it once might have made sense to partition apps into separate markets of social networking and social media, that wall has since broken down,” Boasberg wrote.

He cited fierce competition from major players like YouTube and TikTok that has diminished Facebook’s market share below monopoly level.

“The Court ultimately concludes that the agency has not carried its burden: Meta holds no monopoly in the relevant market. Judgment must therefore be entered in its favor,” the judge wrote.

Is Meta stock a buy?

Meta stock hasn’t really moved much since that ruling was handed down last week, in fact, shares have declined a bit. However, that was more likely due to a larger selloff in the market due to concerns about interest rates and tech valuations.

But Meta stock has been sputtering over the past month, down about 18%, mainly due to a disappointing third quarter earnings report. Meta missed earnings estimates, mainly dur to a huge one-time charge related to the federal budget reconciliation bill.

But also, investors were concerned about spending. Meta raised its capital expenditures guidance for 2025 and its operating expenses. The company also indicated that 2026 capital expenditures will be “notably larger.”

The concern among investors is that too much of this AI spending will go into the unprofitable Reality Labs VR business or AI data center development to support its massive compute needs. On the other hand, Meta sees this massive spending as central to its strategy of growing its core businesses and keeping pace in the AI arms race.

The judges ruling, if nothing else, eliminates the uncertainty that had been hanging over Meta for the past five years about whether or not it would be broken up.

While the spending and ROI questions remain, Meta is still the dominant player in its space. It is also the cheapest of any of the Magnificent 7 stocks, trading at 26 times earnings and 20 times forward earnings. If there is a massive correction, Meta probably won’t be hit as hard as some other tech giants just because it is not really overvalued.

Most analysts see Meta as a buy, with a median price target of $850 per share. That would suggest 40% upside. Bottom line: an opportunity to buy a Mag 7 stock and market leader at 20 times forward earnings is certainly worth a look.

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