Investor Paul Meeks won't invest in social media stocks right now, he told CNBC on Monday.
"The interesting thing about this full-fledged assault on the social media companies, particularly the major platforms, is that it's a bipartisan concern," the portfolio manager at Independent Solutions Wealth Management said on "Trading Nation."
Social media has been under fire due to the amount of false and misleading information going public. Under the current law, platforms cannot be held legally responsible for what their users write.
"They'll face probably an unraveling of Section 230 of the Communications Decency Act of 1996, which is way overdue," Meeks said. "[It's] legislation that's decades old, when we were at the very early stages of the internet, and totally inappropriate today."
The crackdown's cost to companies will be dramatic, according to Meeks.
"They'll now probably have to spend a lot of dollars on compliance," he said. "When you start restricting their content on their platforms, that's obviously going to make a number of their digital advertisers angry."
Meeks, who sold his entire Facebook position within the last couple of months, said he sees an additional threat from Apple because of changes to its iPhone operating system.
"You, and me, and everybody else have a chance to opt out of them following our data," he said. "[It's] a real nasty headwind, particularly for Facebook."
One thing that shouldn't worry investors, Meeks said: Regulators penalizing social media for its role in the Reddit rebellion.
"I don't think there was much wrong with information going viral. That is a relatively new venue the last couple of years. It's not going away," he noted. "Going viral is something that we're going to have to get used to."
Where to invest instead
With $700 million in assets under management, Meek's top strategy is to target semiconductor stocks. It was also his top play in 2020, and it paid off. The VanEck Vectors Semiconductor ETF, which tracks the group, was up about 55% last year.
"About half my tech portfolios are in semiconductor names," said Meeks. "Some of them are driven by the launch of 5G wireless."
"These are probably my dream team within the semiconductor space," Meeks said.
Disclosure: Paul Meeks owns the stocks he recommends. He is not shorting any stocks.