Meta Doesn't Want You Arguing Politics With Strangers

Editor's note: Whether we like it or not, social media has become fertile ground for political clashes. But according to Vic Lederman – the editorial director of our corporate affiliate Chaikin Analytics – one social media giant is taking steps to keep outrage out of its business model. In this piece, published last week in the Chaikin PowerFeed e-letter, Vic uses one financial tool to show why this change won't hurt the company's stock – even in an election year...

Meta Platforms (META) just made a bold business decision...

This year, the social media titan doesn't want you fighting over politics with people you don't know. At least, not on its platforms. And it's making major changes to make this a reality.

You likely already know that Meta is the parent company behind Facebook. It also owns messaging app WhatsApp, photo- and video-sharing service Instagram, and Threads – a relatively new competitor to X (formerly known as Twitter).

That easily makes Meta the largest social media company in the world. And it's estimated that nearly 247 million Americans accessed Facebook last year.

In other words, darn near every American uses one of the Meta-owned apps.

So this new policy is a big deal. What's more, we're heading into what will likely be a very loud, contentious election cycle this year. It's a surprising time for Meta to make a change.

Let's take a closer look at what this news means for the company. And we'll also check up on Meta using one of our favorite tools...

Don't worry – Meta isn't banning politics on its platform... or anything quite so absurd.

But it is making a change that could have major implications for its business...

You see, Meta will no longer "push" political posts from accounts that users aren't currently following. The biggest change is coming to Instagram and Threads, with plans to roll out the same control on Facebook in the future.

There's no question this will reduce user engagement...

Long ago, the company learned that posts can get more attention if they stir up negative emotions. And it has "rage baited" users into spending more time on its platforms for years now.

So it's unquestionable that this change will likely lead to lower "time on site" numbers. But that might be good for Meta in the long run.

The company has already worked on cooling the political heat on Facebook in recent years. Here's how Meta puts it on the "Transparency Center" section of its corporate website...

People have told us they want to see less political content, so we have spent the last few years refining our approach on Facebook to reduce the amount of political content – including from politicians' accounts – you see in Feed, Reels, Watch, Groups You Should Join, and Pages You May Like.

These changes aren't getting in the way of the company's stock. As you can see in the chart below, Meta is soaring to new highs...

Meta has blown past its previous 2021 high. And the Power Gauge system – a tool we use at Chaikin Analytics that gathers investment fundamentals into a simple rating – caught the turn near perfectly.

Today, our system gives Meta a "very bullish" rating. And based on the stock's relative strength versus the S&P 500 Index, Meta has been outperforming the broad market.

In fact, the stock has soared about 61% over the past six months. The S&P 500 is only up 14% over that same time frame.

Nearly all of us interact with Meta's products... like it or not. Personally, I welcome this change.

I'd rather spend my time focused on the markets than reacting to a stranger's political opinion I didn't need to know in the first place. Apparently, most investors feel the same way.

Sure, promoting political content less will probably lower user engagement on Meta's apps... But it's not stopping the stock from soaring.

Good investing,

Vic Lederman

Editor's note: Marc Chaikin, the founder of Chaikin Analytics, has 50 years' worth of experience in the stock market. He has traded through 13 presidential elections. And next week, on February 29, Marc is stepping forward with a crucial 2024 election-year forecast... about a dramatic event that has a 90% chance of hitting U.S. stocks around the Super Tuesday primaries. This conversation is free to watch online, but you must sign up in advance... Save your spot right here.

Further Reading

"Chip stocks have become one of the best-performing corners in the market," Vic writes. Semiconductors drive our modern world. And related stocks have soared... leaving "old economy" investments in the dust. Here's one fund that's leading the charge... Learn more here.

"The market rally passed a critical test of resilience in January," Sean Michael Cummings writes. Stocks finished up last month. And according to history, a strong January is bullish for the rest of the year – especially during an election year... Read more here.