Meta’s Antitrust Case: Potential Breakup and Its Impact on Stock Value

In a significant development, Meta Platforms Inc., the parent company of Facebook, Instagram, and WhatsApp, is facing scrutiny from the U.S. Federal Trade Commission (FTC) over alleged monopolistic practices in the social networking space. As the antitrust case unfolds, the possibility of Meta being forced to break up its business could yield unexpected benefits for shareholders, despite the company’s resistance to such a scenario. This article explores what this potential breakup could mean for Meta’s stock value and overall market standing.

The Antitrust Case Overview

The FTC’s case against Meta, initiated earlier this week, accuses the company of engaging in anti-competitive tactics by acquiring Instagram in 2012 and WhatsApp in 2014. The agency contends that these acquisitions were aimed at neutralizing competition, thereby solidifying Meta’s dominance in the market. As the legal battle progresses, the stakes are high for Meta, which might have to divest its subsidiaries or undergo a major restructuring if found guilty of violating antitrust laws.

Market Performance Against Peers

Interestingly, while many tech stocks have been struggling in 2025, Meta’s performance has been somewhat resilient. According to data from FactSet compiled by Dow Jones Market Data, a market-cap-weighted index of the “Magnificent Seven” tech stocks — excluding Meta — has seen a decrease of 17.3% this year. In contrast, Meta’s stock has only dipped by 9.5%, positioning it favorably among its Big Tech peers, with only Microsoft Corp. performing better.

Impact of Legal Uncertainty on Stock

The ongoing antitrust case has undoubtedly cast a shadow over Meta’s stock performance, contributing to approximately half of its losses in the past few trading sessions. Investors are typically wary of uncertainty, and the prospect of a prolonged legal battle can introduce further volatility. However, the question remains: what would happen to Meta’s stock if a breakup occurs?

Potential Outcomes of a Breakup

Should Meta be compelled to break up its business, several potential outcomes could unlock shareholder value. One possibility is that Meta could spin off Instagram and WhatsApp into publicly traded companies, granting shareholders shares in all three entities. Alternatively, the company might choose to sell off one or both subsidiaries for cash. However, experts suggest that the breakup process would likely be protracted, potentially involving various appeals.

Insights From Industry Experts

Gil Luria, head of technology research at D.A. Davidson, posits that Meta should consider proactively spinning off these segments. He believes that separate platforms could attract higher trading multiples than when bundled together. A spinoff would enhance transparency, allowing investors to better gauge the financial health of each business. For instance, while Facebook remains a stable revenue generator, WhatsApp has shown faster growth potential. This distinction can help investors make more informed decisions about their holdings.

Benefits Beyond Short-Term Gains

A split could also alleviate the financial pressures linked to Meta’s expansive research and development costs. Currently, these expenditures skew the company’s net income, but spinoffs could alleviate this burden, allowing each entity to pursue growth independently.

Historical Context of Corporate Breakups

Historically, corporate spinoffs have led to increased shareholder value. For example, Hewlett Packard Enterprise Co. (HPE) spin-merged its enterprise segment in 2017, resulting in stock gains of 26% for HPE and over 47% for DXC Technology Co. in the following year. Likewise, General Electric’s (GE) spinoff of GE HealthCare Technologies Inc. in January 2023 saw GE’s stock rise by 78% and GE HealthCare’s by 27% over the subsequent year.

Mixed Outcomes from Previous Spinoffs

However, not all spinoffs guarantee success. For instance, following the split of eBay Inc. (EBAY) and PayPal Holdings Inc. (PYPL) in 2015, both companies saw their stock values decline. While PayPal has since enjoyed a resurgence, this serves as a reminder that outcomes can vary significantly based on market conditions and investor sentiment.

Conclusion

As the antitrust case against Meta draws public and investor attention, the company’s potential breakup could redefine its financial landscape. While the process is fraught with uncertainty and volatility, many analysts suggest that a separation of its core assets may ultimately prove beneficial for shareholders in the long run. Regardless of the final outcome, the situation underscores the complexities of navigating corporate strategy amidst regulatory pressures, leaving investors to closely monitor developments.