Cramer Calls Wall Street's Reaction to Meta's $17B Settlement "Ridiculous": Narrative Twisted

"Mad Money" host Jim Cramer called Meta Platforms Inc.'s $17 billion settlement over allegations of teen social media addiction a "big win" for the company.

Despite the settlement, Cramer expressed concerns that the positives have not been accurately reflected in Meta's stock price. He criticized the market's initial reaction to the news, when Meta shares fell 1.4% before recovering in midday trading. The commentator called it "ridiculous" and said the stock should have risen higher.

Cramer argued that the settlement halted a landmark federal lawsuit in California, eliminating a significant threat to the company. He noted that Meta could have faced fines of up to $200 billion and years of litigation delays.

"Somehow, the narrative has been twisted to say this is bad for Meta. That's crazy," Cramer said during CNBC's Investing Club morning meeting.

However, Cramer noted that speculation about Meta potentially issuing more shares to fund the settlement and its AI investments may have tempered the stock's modest reaction. He suggested the company could offset these costs by launching a public cloud business to sell excess computing power to other companies.

Senators Slam Meta's Child Safety Issues

On Wednesday, Meta agreed to pay up to $17 billion to resolve allegations from 29 states that Meta designed its platforms to attract children to addiction, misled users about safety risks, and improperly handled children's data. Meta denied wrongdoing.

Under the proposed settlement, Meta will set limits on teen usage time and nighttime use, strengthen age verification, and expand parental controls. Participating states could receive approximately $12.7 billion, while Meta expects to record about $10 billion in legal expenses in the third quarter of 2026. The agreement also includes a $459.3 million settlement for separate privacy claims related to Cambridge Analytica.

The settlement drew reactions from several Democratic lawmakers. Senator Bernie Sanders called it "a good step forward" but insisted that "more work needs to be done" to prioritize children's health over tech giants' greed. Other senators echoed similar views, calling for stricter regulation of tech giants.

Senator Richard Blumenthal said it shows Meta is "guilty of harming children" and supported the case for the Kids Online Safety Act. Senator Dick Durbin accused Meta of repeatedly putting profits above children's safety and urged bipartisan regulation of tech giants.

META stock performance: On a year-to-date basis, Meta shares are down 12.72%. On Wednesday, it closed up 1.07% at $576.14.