According to CNBC, opening arguments in the Meta Platforms child privacy case are set to begin Tuesday, with 29 states alleging that the Facebook and Instagram parent violated a federal child privacy law, consumer protection statutes and encouraged addictive behavior among teens and children. Meta’s lawyers said the company could face as much as $1.4 trillion in liability, while attorneys for the states told a judge last week that $200 billion is a more realistic figure. Investors are also focused on the possibility that Meta could be ordered to change backend features such as infinite scroll and algorithms, which could affect its advertising business.

Gil Luria, head of technology research at DA Davidson, said changes to features like infinite scroll and algorithms would alter how social media products operate and reduce Meta’s ability to keep users in the app and sell more ads. JJ Kinahan, senior vice president at Cboe Global Markets, said options markets are pricing in a $30 move in Meta shares through the end of August, or about 5%, and as much as a $55 move, or 10%, through the end of September. Meta stock was down about 3% in midday trading Tuesday.

Paul Meeks, managing director at Freedom Capital Markets, said he would avoid the shares because of the legal case and concerns about Meta’s artificial intelligence spending. JPMorgan traders wrote in a desk note last week that investors should keep watching the trial headlines. Mike Khouw, a YieldMax strategist at Tidal Financial Group, said the key question is whether some of Meta’s activities are meaningfully curtailed or prohibited in the future, which could have a larger financial impact than any settlement or judgment. Former Justice Department antitrust chief Jonathan Kanter said the states are seeking remedies that could require Meta to delete data it allegedly acquired unlawfully from children and eliminate models trained on that data.