A recent investigative report revealed that Meta Platforms, Inc. (META.US) expects approximately 10% of its 2024 total sales—around $16 billion—to stem from fraudulent and prohibited online advertisements. The report cites internal documents identifying these ads as promoting "deceptive e-commerce, fraudulent investment schemes, illegal online gambling, and banned medical products."

A Meta spokesperson responded, stating the company actively combats such ads and dismissed the 10% estimate as "a rough, overly broad internal projection." Internal files reportedly detail Meta’s efforts to quantify fraudulent ad prevalence across Facebook and Instagram, highlighting ads tied to scams and regulated goods.

Financially, Meta reported 2024 sales exceeding $164.5 billion, with Q3 revenue up 26% YoY to $51.24 billion. However, its aggressive AI investments—including raising its annual expense guidance by $2 billion—sparked investor unease. Following its earnings call, Meta’s shares plummeted over 11% in a single session, erasing nearly 20% in five days, leaving its market cap at ~$1.56 trillion.

Wall Street grows wary of Meta’s ballooning AI capex, now projected at $70–72 billion for 2025 (up from $66–72 billion), with 2026 spending set to "significantly exceed" this. Analysts fear prolonged margin pressure, prompting some to lower 12-month price targets.

Regarding ad fraud, the report alleges Meta earns ~$7 billion annually from "high-risk" ads violating U.S. regulations, with ~15 billion such ads displayed daily. While internal goals aim to curb fake ads, concerns persist that abrupt removals could dent revenue.

Meta’s spokesperson countered, emphasizing proactive enforcement and calling leaked documents "selective," arguing they overlook the company’s broader anti-fraud measures. "Many flagged ads were later deemed compliant," the spokesperson added.