A Potential Shareholder Resolution Threatens to Expose Meta

  • Social media giant Meta Platforms (FB) is off to a very rocky start to the new year.
  • A shareholders’ resolution openly questions new initiatives, threatening corporate stability.
  • Conservative investors may want to wait out the rumblings until directional guidance arrives.
Meta (FB) logo is shown on a device screen. Meta is the new corporate name of Facebook.
Source: Blue Planet Studio / Shutterstock.com

Entering into the second quarter of the year, Meta Platforms (NASDAQ:FB) surely had different ideas about what 2022 would look like, given management’s push into the metaverse and efforts to combat the ghoulish elements of the internet. Nevertheless, despite its efforts, FB stock has worryingly shed multiple billions in valuation, leaving many onlookers to question what might come next for the social networking giant.

One of the most recent developments working against Meta is a proposed resolution — led by angry shareholders of FB stock who believe the company has lost its way — which seeks to right the ship, bringing the once all-powerful corporate entity back to focusing on its core businesses. According to a New York Post article, the as-of-yet approved resolution seeks two redresses:

  • First, shareholders are calling for an outside assessment of Meta’s Audit and Risk Oversight Committee, a board that materialized in 2020 that makes decisions on content moderation issues, the most conspicuous example being the banning of former President Donald Trump on Meta’s social media platforms, Facebook and Instagram.
  • Second, shareholders seek to draw attention to the “potential psychological and civil and human rights harms” associated with Meta CEO Mark Zuckerberg’s embracing of the metaverse, essentially the next evolution of connectivity platforms and applications. Disturbingly, the Post cited an incident of virtual assault, to put it very diplomatically.

Not surprisingly, Meta’s board opposes both resolutions, labeling them “unnecessary” and asking shareholders to vote against them. Still, with FB stock down 36% on a year-to-date basis, that so many prominent people are asking questions may not bode so well for Meta in the near term.

FB Meta Platforms $210.58

FB Stock and the Ongoing Censorship Debate

Given the rancorous runup to the 2020 presidential election along with the aftermath of the acrimony, the issue of censorship has consistently sparked public debate. Specifically, people raise up a genuine concern: does big tech have the right to quell free speech? In short, it does.

Now, before you bombard my inbox with “free speech,” let me clarify the above answer. The federal government — and by deduction state and local authorities — does not have the right to suppress your speech, given reasonable restraints. However, a private — private meaning not a governmental institution — company like Meta can define its content policy as it sees fit.

Indeed, whenever the censorship debate pops up, participants to the discussion often forget that people and institutions censor speech/content all the time. Can you broadcast prurient material on national TV? Is refusing to stand (when you are fully capable) at The Tomb of the Unknown Soldier at Arlington National Cemetery acceptable?

Yes, these are extreme examples, but censorship routinely occurs. Therefore, that censorship exists probably won’t impact FB stock.

What people are arguing about is the undue influence of big tech that colors narratives — narratives that mainstream media outlets broadcast on a minute-by-minute basis. Therefore, Meta banning Trump is a huge deal. And I believe reasonable people from across the aisle can understand why the ban is problematic.

It’s not about Trump per say. It’s about how dissenting voices have almost no chance against the virtual monopolization of media manipulation.

The Metaverse Isn’t All That It’s Cracked Up to Be

Personally, I’m not a big fan of the metaverse for myriad reasons. A major component of my hesitation is that it sounds like a marketing shtick. While digitalization will certainly increase in scope and scale, we invariably live in the analog world. I don’t think that will ever change. So from that perspective, I can see why some are concerned about FB stock.

The best part is, you don’t have to take my opinions as gospel. Back in January 2012 — before I believe anybody was talking about the metaverse and back before Meta was a publicly traded stock — a University of California Santa Barbara op-ed mentioned that tech was destroying the quality of human interaction. Per contributor Melissa Nilles:

Little by little, Internet and mobile technology seems to be subtly destroying the meaningfulness of interactions we have with others, disconnecting us from the world around us, and leading to an imminent sense of isolation in today’s society. Instead of spending time in person with friends, we just call, text or instant message them.

With the metaverse, you can now add assault to that list, at least according to disgruntled shareholders of FB stock — and an assertion that’s beginning to add evidence to its profile. Given the dangers that predators have long posed to children on the internet, it would logically seem that the metaverse will open up a whole new can of worms.

In this context, the dissenting shareholders may be onto something.

Hold the Horse for Now

At this moment, it’s extraordinarily difficult to say what the ultimate trajectory of FB stock will be. In my opinion, despite all the vulnerabilities and problems linked to the underlying company, the Facebook platform has become almost interchangeable with the internet itself. That kind of power presumably won’t slip away anytime soon.

However, changes could be coming to Meta, ones that Zuckerberg don’t care for. Plus, the steep losses of FB stock suggest there’s more than disgruntlement involved here. People are voting with their wallets. Therefore, it may be best to adopt a wait-and-see approach before moving forward.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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