A New Mexico judge ordered Meta to pay $25 billion on Wednesday, October 21, following a jury finding that Facebook repeatedly deceived consumers about privacy safeguards and personal data practices. The penalty is the largest Meta has received. The jury delivered the verdict on September 25 and found nearly 44 million breaches of New Mexico's consumer protection laws. State law could have supported penalties exceeding $219 billion for those violations. Judge Francis Mathew lowered the penalty to $25 billion. The payment is intended to support public education in New Mexico.
The dispute originated in the Cambridge Analytica scandal that emerged in 2018. The British political consultancy acquired information concerning as many as 87 million Facebook users through an outside developer's personality quiz application. The information supported political profiling, including activities associated with Donald Trump's 2016 presidential campaign. New Mexico filed suit against Meta in 2021, alleging that Facebook deceived residents about safeguards for personal information. The allegations also challenged Facebook's representations about combating misinformation and applying content moderation rules.
However, Meta shares rose roughly 2% to around $708 during afternoon trading. The $25 billion penalty equals around 1.4% of Meta's approximately $1.8 trillion market capitalization. Investors already understood the risk of a substantial penalty after the September jury verdict. Wednesday's decision clarified the amount but remained open to appeal. The Nasdaq rose approximately 1.2% on Wednesday, so Meta's advance cannot be explained by the judgment alone. D.A. Davidson technology analyst Gil Luria said the continuing legal proceedings made the cases unlikely to materially affect Meta's value.
Meta's Muse AI assistant has recorded 10.9 million downloads since launching on September 8. Muse reached 2.5 million daily active users on October 16. Meta shares have risen roughly 15% since the launch. However, Meta shares have retreated from the highs reached in October. The usage figures indicate robust initial demand. However, Meta has spent heavily on advertising Muse, and the assistant's capacity to deliver lasting profits remains unproven.
Meta will release third-quarter results after Wednesday's market close. Analysts forecast approximately $63.3 billion in revenue, equivalent to around 24% growth from a year earlier. Meta has forecast capital expenditure of $130 billion to $145 billion for 2026, mainly for AI infrastructure and the core business. Investors will assess whether advertising revenue can keep financing that expenditure. Investors will also assess whether Muse can eventually earn enough to justify rising operating expenses. Options traders were pricing a possible 6.3% change in Meta shares by the end of the week around the earnings announcement. The results could therefore influence the share price more strongly in the short term than Wednesday's judgment. The privacy judgment creates another liability while Meta commits unprecedented amounts to AI. Meta's longer-term share performance will depend substantially on whether those investments deliver meaningful returns.
Meta is expected to appeal on the grounds that the penalty is excessive and New Mexico did not demonstrate actual consumer harm. An appeal could last years. Meta may request a court-approved stay that postpones enforcement during the proceedings. The judgment could eventually be lowered, overturned or settled. However, Source New Mexico reports that the judgment accrues 15% annual interest for as long as payment remains outstanding. Interest could significantly enlarge Meta's financial exposure if the entire penalty survives. Investors currently appear more focused on earnings and AI, but continued optimism will depend on business performance and the amount ultimately payable.