Meta stock is tumbling after losing a landmark social media addiction ruling

• Meta stock fell sharply during Thursday's trading session.
• A jury found Meta and Google were negligent in a landmark trial on social media addiction.
• Investors are rethinking the tech giant's exposure to legal liabilities.

The move: Meta stock tumbled on Thursday after adding to the Magnificent Seven name's already double-digit year-to-date loss. The stock fell as much as 8%, and is down 18% year to date.

Why: Shares dropped after the Facebook and Instagram parent company, alongside Google, was found negligent in a trial on social media addiction.

Shares of Google parent Alphabet were also down on Thursday though not as sharply as Meta stock.

Snapchat, along with TikTok, was also a defendant in the case, but settled the lawsuit before the trial began. Snapchat was down 12% on Thursday, adding to the stock's roughly 60% decline in the past 12 months.

A 20-year-old woman was the focus of case, saying that her social media use at a young age was detrimental to her mental health and that the tech companies knowingly engineered their products to be addictive.

A jury found Meta and Google negligent after nine days of deliberation, saying that the companies knew their product design was dangerous, but did not warn the plaintiffs.

The jury decided Meta was 70% responsible for the harm, while Alphabet-owned YouTube was responsible for the other 30%. Meta owed $4.2 million in damages while YouTube owed $1.8 million.

Both Meta and Alphabet indicated they plan to appeal the ruling.

What it means: The stock's decline comes as investors fear what the case could mean for social media companies going forward.

The Los Angeles case has been seen as a bellwether for how juries could view other personal injury lawsuits against tech companies.

Meta warned investors in its fourth quarter earnings release in January that legal battles tied to "youth-related issues" could "ultimately result in a material loss."