Meta Shares Face Mounting Pressure Amid Scandal and Spending Concerns

Meta’s stock is experiencing a dramatic selloff, driven by a potent combination of regulatory scrutiny and growing investor skepticism over the company’s massive spending plans. The decline has accelerated beyond typical earnings disappointment, fueled by a damaging report on advertising practices and well-timed insider stock sales.

Insider Transaction and Advertising Scandal Fuel Declines

A significant catalyst for the recent downturn was a report suggesting a substantial portion of Meta’s advertising revenue may be linked to promotions for fraudulent schemes and prohibited goods. Investor reaction was swift and severe. On Thursday alone, the stock plummeted as much as 2.7 percent, closing near the $619 level. Trading volume surged dramatically, climbing 47 percent above the daily average—a clear indicator of widespread market unease.

Compounding the negative sentiment was a notable insider sale. Chief Operating Officer Javier Olivan disposed of 517 shares on November 3rd, a transaction valued at over $339,000. This move occurred notably just before the stock’s sharp decline, leading to questions about its timing and contributing to the market’s wary stance.

Investor Anxiety Over AI Spending Echoes Metaverse Concerns

The current drop is part of a broader, concerning pattern. Over just one week, Meta shares have shed approximately 17.5 percent of their value. The most severe single-day loss occurred following the Q3 earnings release, when the stock plunged more than 11 percent.

Should investors sell immediately? Or is it worth buying Meta?

This reaction is particularly striking given that the headline figures were robust:

• Revenue reached $51.24 billion, surpassing analyst expectations of $49.34 billion.
• Adjusted earnings per share came in at $7.25, a strong performance that contrasts with the reported $1.05 per share, which was impacted by a one-time tax charge of $15.93 billion.

However, the details within the report raised alarms. Meta announced plans for significantly increased capital expenditures throughout 2025 and 2026, primarily to fund its ambitious artificial intelligence projects. This has created a flashpoint for investor concern, with many fearing a repeat of the costly Metaverse venture. CEO Mark Zuckerberg has already channeled tens of billions into that initiative without generating meaningful returns, and the market is growing nervous that the AI push could become a similar financial sinkhole.

Erosion of Confidence Weighs Heavily on Share Price

The convergence of questionable advertising revenue sources, massive future investments with uncertain payoffs, and strategic insider selling is fundamentally undermining investor confidence. The consequences are tangible even for the company’s leadership, as Mark Zuckerberg’s personal wealth contracts noticeably with each market decline.

The central question facing Meta is whether its aggressive AI strategy will become a lucrative opportunity or its next multi-billion dollar misstep. Based on the recent market performance, investors appear to be leaning toward a pessimistic conclusion.