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META Share Price Down On The Week, Are US Prosecutors Probing?

Analyst Team trader
Updated 17 Mar 2024

(NASDAQ:META) After a recently uncharacteristic downward week for Meta shares, down 2.6% having previously soared over the prevailing 12 months, recent news out of the WSJ will not have many smiling. In a significant turn of events, U.S. prosecutors in Virginia have launched an investigation to ascertain whether Meta Platforms Inc., the parent company of Facebook, had a role in facilitating and profiting from the illegal sale of drugs on its social media platforms.

Subpoenas have been issued by the authorities as part of the criminal investigation, hinting at the gravity of the potential charges. These legal instruments demand that Meta hand over documents and information that could shed light on the situation. Questions directed at the tech giant probe the depth of Meta's involvement and through which means – if any – illicit drug sales may have been conducted with the knowledge or inadvertent support of the platform.

Meta's spokesperson has firmly stated that the company does not condone the sale of illicit drugs, which is a direct violation of their policies. “The sale of illicit drugs is against our policies and we work to find and remove this content from our services. Meta proactively cooperates with law enforcement authorities to help combat the sale and distribution of illicit drugs.”

The company asserts that it actively works to purge any content related to illegal drug sales from its services. Indeed, Meta emphasizes its collaborative efforts with law enforcement to prevent and take action against the spread and sale of illegal substances online.

Amplifying its commitment to combatting this issue, Meta's president of global affairs, Nick Clegg, announced a collaborative endeavor. Meta has joined forces with significant bodies, including the U.S. Department of State, the United Nations Office on Drugs and Crime, and even social media rival Snapchat, with the goal of disrupting online sales of synthetic drugs and raising awareness about associated risks.

This investigative scrutiny comes on the heels of a lawsuit filed last year in Delaware by investment funds against the tech juggernaut.

As the landscape of social media becomes increasingly complex with the intertwining of digital communication and real-world activities, this probe represents a critical juncture for Meta. For its' part. the company's spokesperson has quickly come to the fore in a bid to stress the effort Meta are putting in, highlighted the decade-long commitment to curtailing abuses on its platforms while aiding law enforcement in prosecuting criminal activities.

From a shareholder perspective, quite how much this will impact the narrative or sentiment is yet to be seen. Sitting on almost 150% in gains over the past 12 months, the stock has done little but move up in recent times. We will be watching in the pre-market and at opening for the market reaction.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.