A Federal Trade Commission (FTC) report presented in court has revealed that Instagram’s algorithm unintentionally fostered harmful interactions between adults with predatory intentions and minors, raising serious concerns about child safety on the platform. The internal Meta document, dating back to 2019, detailed these vulnerabilities, showing that the company was aware of the risks but failed to act decisively.
Despite the magnitude of the threat, Meta’s leadership, under CEO Mark Zuckerberg, allegedly underfunded the integrity team responsible for securing the platform. The report suggests that the team remained understaffed, despite its critical role in protecting users, especially young ones. This lack of investment has now cast doubt on Meta’s stated commitment to user safety and the ethical handling of its platforms.
The revelations come at a time when Meta Platforms Inc. (META) continues to post strong financial results. For the first quarter of 2025, Meta reported $42.3 billion in total revenue, marking a 16 percent year-over-year increase. With a solid operating income of $17.6 billion and a free cash flow of $10.3 billion, the company remains one of the tech sector’s financial heavyweights.
Analyst sentiment around Meta’s stock remains broadly positive. Out of 61 analysts, the average one-year price target for META stands at $702.09—nearly 20 percent above its current trading price of $589.58. The highest forecast places the stock at $935.00, while the lowest estimate sees it at $448.00. Meanwhile, brokerage firms have issued an average recommendation of 1.8, indicating an “Outperform” status.
Yet, not all valuations are optimistic. GuruFocus pegs Meta’s fair value at $527.27, implying a downside risk of around 10 percent. This projection is based on historical multiples, business growth trends, and estimated performance.
In terms of business segments, Meta’s “Family of Apps” — including Facebook, Instagram, and WhatsApp — generated nearly all of the company’s revenue at $41.9 billion, showing continued dominance in social media advertising. Meta AI is also gaining traction, with close to 1 billion monthly active users across its platforms. AI-driven advertising innovations and tools for content creation are credited for boosting advertiser performance and engagement.
However, financial risks remain. Meta’s Reality Labs division, responsible for virtual and augmented reality, reported a quarterly revenue of just $412 million while racking up a $4.2 billion operating loss. Rising capital expenditures — estimated between $64 billion and $72 billion for the full year — also reflect the heavy investment in servers, data centers, and AI infrastructure. This high spend could strain the company’s financial flexibility.
Moreover, Meta is facing increasing regulatory pressure, particularly in Europe, where data protection laws and advertising policies continue to evolve. These challenges, combined with global economic uncertainty and rising infrastructure costs, pose potential headwinds.
The FTC’s report intensifies the ethical scrutiny already surrounding Meta. While its financials may appeal to investors, the company must now reckon with growing criticism over user safety, platform responsibility, and its handling of vulnerable users. With ongoing legal proceedings and global attention, how Meta responds to these challenges may significantly influence both its reputation and long-term business outlook.
