![]() So, neither of these values alone were cause for concern, but when taken into context of the existing problems and the likelihood these investments won’t pay off for years to come (possibly close to a decade) and it became clear Reality Labs and the metaverse won’t provide near term relief. And while Meta did break out Reality Labs from its “Other” category, this segment of the business has from the start been a much smaller portion of the overall business (just 2.60% of total revenue in Q4 2021). Meta had previously announced it would spend over US$10 billion for its metaverse ambitions in 2021, which was assigned to its Reality Labs group, so the operating loss reported throughout the year in its Q4 2021 earnings announcement wasn’t a surprise. Metaverse Push Not to Blame, but Hasn't Helped An argument could be made that Facebook’s rebranding had little impact on the declines since Meta’s stock price increased for several days following the October 2021 announcement and remained relatively flat for the remainder of 2021-an indication some had hoped the rebranding would alleviate pressures surrounding the company from its controversies. These user results, coupled with challenges from IDFA (and privacy in general), concerns over Europe, and the controversies all contributed to the immediate 26% drop in Meta’s stock price (February 2nd to 3rd 2022) after announcing its quarterly results. Facebook MAUs (monthly active users) and DAP (daily active people) across all of its properties however, increased during the last quarter. While very unlikely, Meta listed the possibility of pulling out of Europe due to these privacy issues – if forced to keep data in Europe, Meta is likely to make the necessary investments to reach compliance.Īll of these pressures resulted in Facebook DAU (daily active users) declining in its most recent quarter (1.929 billion, down from 1.930 billion). ![]() It was invalidated due to concerns over surveillance by US government and intelligence agencies. The EU-US Privacy Shield was used by companies to transport data between the US and EU. Relatedly, Meta has also called out concerns over Europe and the need for an EU-US Privacy Shield replacement (which was invalidated in July 2020 by the Schrems II legal decision). Meta called out Apple’s changes to its IDFA (Advertising Identifier) and the negative impact on its revenue. Competition from others like ByteDance (TikTok) are shifting the competitive landscape. Many of the younger generation are not core Facebook users and while they may use Meta owned social networks like Instagram, other regions are already seeing growing numbers of young individuals who have never used any Meta sourced platform. A litany of controversies, which includes mis/disinformation, how the company moderates content/users, privacy (both related to its commercial activities and workings with government agencies), scandals (i.e., Cambridge Analytica scandal and more recently internal whistleblower Frances Haugen’s allegations the company puts profits above users’ safety), and the company’s size and position within the market as a potential monopoly.Meta is facing substantial pressures on several fronts which have contributed far more to the stock declines than a rebrand and focus on the metaverse. ![]() Even if there is some negative impact, the reaction to the metaverse play isn’t nearly as significant as Meta’s other problems. ![]() Given the relative proximity of Facebook’s Meta rebranding (announced October 28, 2021) to the change in stock price, one could argue for a cause and effect, but the metaverse play isn’t likely the reason for Meta’s stock declines. Meta’s recent rebranding to reflect its emphasis on the metaverse has led some to question if investors are already souring on the prospects of the metaverse or, alternatively, questioning the company’s ability to profit from this trend. Meta’s stock has taken a beating, dropping nearly 38% of its value at the close of February 2022, just two months removed from the start of the year (Jan 3, 2022)-Meta’s stock is down 44% from a peak in September 2021. Meta Platforms' Stock Down 20% YoY at Close of February 2022 ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |