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INDONESIA - 2025/10/16: In this photo illustration, Meta AI logo is seen displayed on a smartphone screen with a WhatsApp logo in the background. (Photo Illustration by Algi Febri Sugita/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images META stock has a clear history of extreme stock volatility. In recent years, the stock has experienced four separate corrections where its value plummeted by over 30% in less than two months, swiftly wiping out billions in market capitalization. This pattern confirms that META stock is highly susceptible to sudden, sharp downturns whenever a major risk materializes. The following issues are currently accumulating, contributing to a brewing systemic risk for the company: Regulatory Overhang & Divestiture Risk: The regulatory environment presents an immediate and existential threat. The FTC antitrust trial began in April 2025, raising the prospect of a forced divestiture of Instagram and WhatsApp. Simultaneously, the EU fined Meta €200M (April 2025) under the Digital Markets Act (DMA) and warned of future daily fines reaching up to 5% of global revenue for non-compliance. Persistent Metaverse Losses: The core future growth area, Reality Labs (RL), remains a significant financial drain. RL reported a $4.53 billion operating loss in Q2 2025 alone, pushing the division’s cumulative operating losses since 2019 past $50 billion. Furthermore, declining sales of the Quest headset are hindering mass adoption and complicating the division's path to future profitability. Staggering AI Investment Burden: Aggressive investment in AI infrastructure is placing a massive strain on financial margins. The projected 2025 capital expenditure of $66–72 billion (primarily for AI) contributes to a total estimated 2025 expense load of $114–118 billion (a 20–24% year-over-year increase). This massive spending spree is straining the company's financial health despite strong Q2 2025 advertising gains attributed to AI. That being said, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, consider what could long-term performance of your portfolio could be if you combined 10% commodities, 10% gold, and 2% crypto with equities. Separately, see – What’s Happening With ISRG Stock? Is Risk Showing Up In Financials Yet? It certainly helps mitigate the risk if the fundamentals check out. For details on META, read Buy or Sell META Stock. Below are a few numbers that matter. Revenue Growth: 19.4% LTM and 13.0% last 3-year average. Cash Generation: Nearly 30.7% free cash flow margin and 42.9% operating margin LTM. Valuation: Meta Platforms stock trades at a P/E multiple of 27.8 Opportunity vs S&P: Compared to S&P, you get a higher valuation, higher revenue growth, and better margins META Fundamentals MORE FOR YOU *LTM: Last Twelve Months How Bad Can It Really Get? Looking at META’s risk, it’s clear that even strong companies can take big hits in tough times. During the 2018 correction, META fell about 43%. The COVID-19 pandemic slump brought a 35% drop. The inflation shock hit hardest, with a nearly 77% slide from peak to trough. See our dashboard on How Low META Stock Can Really Go for more details. These numbers show that despite META’s strengths, it’s still vulnerable when the market pulls back hard. Even the less severe downturns delivered significant losses, so it’s important to keep that in mind when evaluating risk. But the risk is not limited to major market crashes. Stocks fall even when markets are good - think events like earnings, business updates, and outlook changes. Read the META Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past. Investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics. Editorial StandardsReprints & Permissions
