Jim Cramer Was Left Surprised By Movement In Meta Platforms, Inc. (NASDAQ:META)’s Shares

Jim Cramer expressed surprise on Thursday regarding Meta Platforms, Inc.'s (NASDAQ:META) stock performance following a major legal victory. The company had been under scrutiny for its social media platforms and their impact on youth usage, with the firm settling claims for up to $16.7 billion over the next decade. Although the potential legal costs once stood at $1.4 trillion, Cramer noted that Meta's shares did not surge as he anticipated, describing the stock as "hated" and "despised."

The settlement's success was attributed to Meta's improved financial outlook, as the firm avoided a yearly payout of $1.3 billion, down from the previous $100 billion. Cramer highlighted that while the legal battles drew attention, Meta's main focus remains its substantial AI-related expenditures and their impact on its core advertising business.

In the second quarter, Meta reported $45 billion in advertising revenue, driven by an 11% increase in ad impressions for its Family of Apps and a 7% rise in price-per-ad. However, the company's free cash flow dropped by 91% annually to $784 million due to soaring capital expenditures reaching $31 billion, which equated to 50% of revenue, sparking concerns about the balance between spending and returns.

Meta also missed analyst EPS estimates and reported an 8% operating income decline. The number of hedge funds holding Meta Platforms, Inc. (NASDAQ:META) shares dwindled from 262 in Q1 to 254 in Q2, with Two Sigma Advisors and Third Point exiting their positions. Comparatively, Meta's forward P/E ratio of 19.27 is higher than Snap's 10.53, and shares represent 1.53% of the float.