Key insights
- An analyst suggests that the recent lawsuits against Meta are not the primary driver of institutional selling. Instead, concerns about Meta's heavy investments in capex and AI, reminiscent of Reality Labs, are the main reason institutions are selling. The lawsuits act as a confirmation for already hesitant investors to exit. The analyst anticipates initiating a strong position if the stock price drops below $400.
What you see today is institutions who already were on the fence of whether to hold or sell, finally deciding to sell.
They were shaken up because of the billions being invested into capex and AI by Meta and they’re worried that it’ll turn into another Reality Labs. That’s the foundation of why the money is outflowing, they don’t think it’ll drive outsided returns.
Now add to this the lawsuits and public scrutiny, then it acts like the confirmation for the already doubting investors to finally exit. In other words, this was what drove institutions over the edge to sell, but they were already shaky to begin with.
I’ve seen a similar situation already when I initially bought Meta in 2022 (fully sold in 2024/2025)
If this pain for them continues I’ll be initiating a STRONG position.
Price target of <400 is an absolute no brainer entry.
Before you scoff, please consider that Meta already had an event of dropping from $350 to $90 from 2021 to 2022
Anything’s possible