What Can Go Wrong For META Stock's Investors?

Core Insights - Meta Platforms (META) has experienced significant stock volatility, with declines exceeding 30% on four occasions in recent years, resulting in billions in lost market value [2] - Despite a year-to-date gain of 8% in 2025, META's stock has recently fallen 18% from summer highs due to concerns over capital investments in AI and competitive challenges [2] - The company's aggressive pursuit of AI growth has revealed weaknesses in execution and market impatience [2] Financial Performance - META's stock has been buoyed by strong advertising revenue and AI investments throughout much of 2025 [2] - Historical data shows that META has faced severe market corrections, including a 43% decline during the 2018 correction and a 35% drop during the Covid pandemic [4] - The inflation crisis led to a nearly 77% decline from peak to lowest point, indicating vulnerability to market fluctuations [4] Competitive Landscape - META faces intense competition from TikTok, particularly in user engagement and advertising revenue, which poses a significant threat to its business model [8] - The company is responding to this competition with initiatives like Reels and creator incentives to retain users and advertisers [8] Investment Risks - META is under increasing regulatory scrutiny, particularly from the EU's DSA/DMA, which could impose fines up to 6% of global revenue, potentially exceeding $9.8 billion based on 2024 revenue [8] - The company plans to invest $70-72 billion in AI in 2025, raising concerns about unclear monetization strategies and potential reduced returns [8]