Meta Platforms' $18 billion settlement of youth social media addiction claims with attorneys general from across the United States is a "big win" for the company, Jim Cramer said. He added, however, that the benefits of Wednesday's agreement to Meta were not being properly reflected in the stock. "Somehow the narrative has turned to say that it was not good for Meta. That's insane," Jim said during the Investing Club's Morning Meeting. The Club stock jumped more than 4% shortly after the opening bell. It briefly reversed and dropped 1.4%, which Jim called "ridiculous," before drifting back up into the green in afternoon trading. Jim labeled the market reaction as an "incorrect read" — saying shares should be much higher on the news. He said the resolution is "a really big break" for Meta, adding that the Facebook and Instagram company could have faced $200 billion in fines and years of prolonged litigation The settlement halts a landmark federal trial in California brought by a group of states including California, Colorado, Kentucky and New Jersey — and, according to Jim, takes an existential threat to the company off the table. The agreement was reached with AGs from 48 states, the District of Columbia, and three U.S. territories. Under the settlement, Meta agreed to implement safety features for kids, including default daily time limits on social media, enhanced parental supervision tools, and "robust age assurance measures" to detect underage children on the platform. It will also eliminate push notifications during school hours during the week and enhance controls to prevent kids from seeing harmful content. Meta also called on YouTube, which is owned by Google's parent Alphabet , and TikTok to follow suit. Jim estimates that only about 1% of younger users are on Facebook and Instagram. The changes should actually be "more impactful" on YouTube and TikTok, given the younger age groups spend more time on those platforms. "The usage requirements are so easily met by Meta. They're not easily met by TikTok and YouTube," he said. Outlining the financial details of the settlement, Meta said that participating parties will receive about 70%, or $12.7 billion, of the allocated payment over a decade. The company said the remaining 30%, or $5.3 billion, will only be released if YouTube and TikTok "implement a one-hour Daily Limit, Night Mode, and age assurance measures" and agree to a combined, matching 30% financial payment. Jim acknowledged that part of Wednesday's muted reaction in Meta shares may stem from market talk that the company might need to launch an equity offering to help fund the settlement and its massive planned capital expenditures to keep pace in the artificial intelligence race. Other major tech companies, including Alphabet and Intel , have embarked on stock offerings to offset AI spending. Alphabet sold $85 billion worth of shares in June. Earlier this month, Intel sold shares worth $20 billion. Meta is already in a weakened financial position given its free cash flow has been pressured by its high levels of artificial intelligence-related spending. Jim said that the "looming specter of an equity offering is there" for Meta, suggesting that such a move would not be favorable for the stock. A saving grace, Jim said, would be Meta standing up a public cloud business to monetize extra computing capacity by selling it to other companies. Meta is "going to have a lot of compute," he said, adding that launching a cloud would help bring confidence back in the stock. Meta CEO Mark Zuckerberg confirmed last month that the company is laying the groundwork for a cloud business. The specific details, even after a less-than-stellar earnings report , have been in short supply. (Jim Cramer's Charitable Trust is long META, GOOGL, INTC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
From CNBC Tech
By CNBC Tech
August 26, 2026
