Regulatory Hurdles and Supply Constraints Weigh on Meta’s Strategy

Meta Platforms finds itself navigating a complex set of challenges this week, with regulatory scrutiny from China and significant supply chain issues impacting its product rollout. The company's shares declined by 1.81 percent on Wednesday amid these developments.

In a move highlighting operational growing pains, Meta has paused the planned launch of its Ray-Ban Meta Smart Glasses in several key international markets, including the United Kingdom, France, Italy, and Canada. The reason stems from an unexpected surge in U.S. demand, which has far outstripped supply. Current wait times for the product now extend into 2026.

While the overwhelming demand validates the company's investments in its Reality Labs division, it also represents a clear loss of potential revenue in major markets. The situation has exposed vulnerabilities within Meta's supply chain, a problem that analysts note will be difficult to resolve quickly given the current order backlog.

Beijing Scrutinizes Major AI Acquisition

Adding to the company's headwinds is heightened regulatory examination from China. Authorities are reviewing Meta's $2 billion acquisition of the AI startup Manus. According to a Financial Times report, China's commerce ministry is investigating whether the deal violated technology export controls.

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The probe focuses on whether Manus attempted to circumvent geopolitical restrictions by relocating its headquarters from Beijing to Singapore in 2025—a practice known within the industry as "Singapore Washing." Should Chinese regulators determine that an export license was required for the technology transfer, they could move to block or significantly alter the terms of the transaction. Such an outcome would be a substantial setback for Meta's AI strategy, which relies heavily on external acquisitions.

Executive Appointment Signals Regulatory Focus

Coinciding with these events, Meta has appointed Curtis "C.J." Mahoney as its new Chief Legal Officer, replacing Jennifer Newstead. Mahoney's background, which includes roles at Microsoft and as a deputy U.S. trade representative, is seen as particularly relevant. His extensive experience in government negotiations positions him to manage Meta's increasingly complex regulatory landscape globally.

Analyst Sentiment and Forthcoming Catalyst

Despite the near-term pressures, analyst consensus on Meta remains largely positive. Data from TipRanks shows that 38 out of 45 covering analysts maintain a "Buy" rating on the stock, with an average price target of approximately $828, well above its current trading level.

Investors are now looking ahead to the quarterly earnings report scheduled for January 28. This update is expected to provide crucial details on Meta's progress in alleviating supply chain bottlenecks and the status of the Manus acquisition. Achieving a sustained recovery toward the $800 mark is likely contingent on positive developments on both fronts.