Meta's (META) Stock Dives 2.27% Amid Product Missteps, Regulatory Pressures, Legal Challenges

Meta's stock (META) fell 2.27% on Thursday, reaching a level not seen since July 2025, with an intraday decline of 2.32%. The selloff reflects growing investor concerns over the company’s recent product missteps, regulatory pressures, and reputational risks.

Technical hiccups at Meta’s Connect 2023 conference have drawn significant scrutiny. A live AI demo for Ray-Ban smart glasses malfunctioned during a Korean recipe tutorial, while the neural band device failed to register gestures during a WhatsApp call demonstration. These incidents raised doubts about the reliability of Meta’s AI infrastructure and wearable tech, potentially undermining confidence in its metaverse roadmap. Executives attributed the issues to network overload and unproven design challenges, but critics argue such failures highlight unmet expectations for product readiness.

Whistleblower allegations further intensified the pressure. Former safety researchers testified before the U.S. Senate, accusing Meta of suppressing internal findings about child safety risks in its VR platforms. They cited unresolved vulnerabilities in parental controls and instances of harmful content, including virtual strip clubs on the Quest app store. The claims have amplified regulatory scrutiny, with lawmakers questioning Meta’s commitment to youth protection. Such revelations could lead to stricter legislation or forced redesigns, adding to the company’s legal and reputational burdens.

Meta faces a mounting legal landscape. Antitrust lawsuits from the FTC and 46 states challenge its acquisitions of Instagram and WhatsApp, while teen mental health cases allege the platform’s addictive features harm users. A former WhatsApp executive also sued the company in 2025 over alleged security lapses, reigniting debates about compliance with past agreements. These cases, combined with a $725 million settlement for data misuse, underscore systemic governance risks. Prolonged litigation and potential fines threaten to strain finances and deter institutional investors.

Public relations setbacks have compounded the challenges. High-profile product failures and leadership missteps, including Mark Zuckerberg’s onstage admission of technical struggles, have eroded trust in Meta’s executive competence. Negative media coverage and social media mockery of the AI demo further tarnished the company’s image. As regulatory and legal pressures mount, investors may demand higher risk premiums, potentially compressing Meta’s valuation until it demonstrates improved transparency and product reliability.