Meta lacks Scale AI control even after risky investment in startup, Needham says

Meta META.O loses over $14 bln cash for Scale AI stake buyout without gaining control over the startup's strategy, as the deal seems to be about securing talent at a very high cost and a considerable risk, Needham says

Instagram and Facebook parent would not have direct access to the cash that Scale AI earns unless the startup decides to distribute it to all shareholders, including Meta, which is not guaranteed, brokerage says

Needham, however, upgrades the rating to "hold" from "underperform" citing better-than-expected trends due to Meta's software-based, highly productive business model

But brokerage says that Scale AI expensive deal reduces Meta's cash at a time when the social media company needs resources to better compete AI race

Meta has unveiled its "Superintelligence Labs" headed by former CEO of Scale AI, according to a memo seen by Reuters

63 of 71 brokerages rate the stock "buy" or higher, 6 "hold" and 2 "sell," their median PT is $722 - LSEG data

As of last close, stock has risen ~22% this year