TLDR
- Meta stock dropped below $600, wiping out gains from its record 20-day winning streak
- New Chinese AI assistant Manus has emerged as potential competition in the AI assistant space
- Meta faces a copyright lawsuit in France from publishers alleging unlawful AI training practices
- Market-wide recession fears triggered by President Trump’s comments contributed to the sell-off
- Analysts note established tech giants maintain distribution advantages despite emerging AI competition
Meta Platforms’ stock fell sharply on Monday, dropping more than 4% to $598.74 amid a broader market sell-off. The decline erased all gains from Meta’s record-setting 20-day winning streak that occurred in January and February. Market concerns were heightened by President Donald Trump’s recent comments about a possible recession.
The sell-off affected many large technology companies. The “Magnificent Seven” tech stocks that drove much of the S&P 500’s rally over the past two years have been particularly impacted by recession fears.
Adding to Meta’s challenges is growing competition in the artificial intelligence assistant space. A Chinese startup recently launched Manus, a new AI assistant that has caught analysts’ attention.
RBC Capital analyst Brad Erickson described the emergence of Manus as “another DeepSeek-like moment.” He noted that Manus incorporates reasoning and actionability capabilities that stand out from competitors.
The AI assistant market has become increasingly crowded. Competitors now include Meta AI, OpenAI’s ChatGPT, xAI’s Grok, DeepSeek, Anthropic’s Claude, Google’s Gemini, and Perplexity.
Wall Street is carefully evaluating what this growing competition means for Meta and other tech giants that have made substantial investments in AI technology.
Analysts point out that established companies like Meta still hold key advantages. Their massive user bases provide a distribution network that startups lack.
“Like other newly developed products from startups, Manus lacks established businesses with billions of users already to whom new AI products can be pushed by Google, Amazon and Meta,” wrote New Street Research analyst Dan Salmon.
Meta can integrate its AI assistant across platforms with over 3 billion active users. These include Facebook, Instagram, WhatsApp, and Messenger.
Meta a significant head start over new entrants
The company reported last month that its chatbot had reached 700 million monthly active users. This scale gives Meta a significant head start over new entrants.
Questions remain about Manus despite its impressive capabilities. Analysts note that the product is still in private beta testing.
There’s limited information about which models Manus uses or whether it has developed cost-saving innovations for inference. The startup has only stated it uses “several distinct models.”
Meta’s stock performance has deteriorated significantly in recent weeks. The company’s shares closed at $611.30 on January 16 before beginning a winning streak that lasted 20 trading days.
This streak pushed the stock to a peak of $740.91 on February 14. Since then, shares have declined in most trading sessions.
Meta stock has fallen more than 18% from its February high. The stock broke below its 50-day moving average trendline last Thursday.
Copyright lawsuit in France
Adding to Meta’s challenges, the company now faces a copyright lawsuit in France. The legal action was filed this week in a Paris court.
Three French publishing associations brought the suit. These include the National Publishing Union, the National Union of Authors and Composers, and the Society of People of Letters.
The publishers accuse Meta of economic “parasitism” and unlawfully training its AI models on their protected content. They allege Meta engaged in “monumental looting” of their intellectual property.
This case appears to be the first such action against an AI giant in France. Meta faces similar litigation in the United States related to the alleged use of unlicensed protected material to train its Llama models.
The legal challenge has been characterized as a “David versus Goliath battle” by Renaud Lefebvre, the director general of the National Publishing Union.
Meta’s stock continues to face pressure from these multiple challenges as investors weigh the company’s AI ambitions against growing competition and legal risks.
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