Or, conversely, Meta has Facebook’s problem. Either way, with Elon Musk taking control of his Twitter, his former emperor of social media, Mark Zuckerberg, clearly looks undressed.
Elon Musk, the world’s Shitposter in Chief, has struck a deal to acquire Twitter just as I’m wrapping up this article. Besides, it’s too early to really say how it all will play out. and may have something to do with him being a rich, white cis man. For everyone else, Twitter has already become, too often, “a hellscape that’s at everyone’s disposal,” which he says he wants to prevent.
His ambitions reportedly seem to be along the lines of creating a global version of China’s WeChat, which began as a simple messaging app, but has since gone on to dominate screen time in many people’s daily lives. Expanded to a multifunctional platform.
If that’s his aim, social media giant Facebook’s recent woes are probably beneficial. It’s a position that Mark Zuckerberg’s company held until relatively recently, but in his last year and a half, the company has rather lost its luster. Of course it’s called Meta. The latest financial data show a dramatic halving in profits, stunning investors as he wiped $65 billion (£56 billion) from market value on Wednesday alone.
At the beginning of the year, the company’s stock was trading at $338 per share. By the end of yesterday’s play, they were down to $98.
So what went wrong? How can you run into trouble while running a company with 2.93 billion daily active users?
There is a lot going on here. First, Facebook makes money from advertising, and global economic uncertainty has cut advertising budgets around the world. As the internet as a whole becomes a more hostile environment for advertising, the stock of Google owner Alphabet has fallen, and all stocks have fallen.
The End of Third-Party Cookies and Apple’s Enforcement of Strict Privacy Settings — Costly, Mehta Says $10 billion in lost revenue this year alone — has taken a serious toll on online advertising, which is exacerbated by the rapid growth of new kids on blocks such as TikTok. It seems to be grouped in a category I call “old guards”. All of them have amusingly confusing rings for MySpace, Friends Reunited, and Live Journal. about it.
But perhaps the biggest problem meta has is the metaverse itself. Facebook spent over $15 billion Since early 2021, we have been working on a Metaverse-focused Reality Labs venture, but this is not a short-term bet. Because you have to develop everything from scratch (at least if you want to control the end result).according to wall street journal, the company set a goal of reaching 500,000 monthly active users for its virtual reality Horizon Worlds platform by the end of this year, but lowered that figure to 280,000 in recent weeks. Current numbers are apparently under 200,000 for him (in February he was at 300,000), so he’ll have to sell quite a few headsets during the holiday season to make up for the shortfall.
“I understand that many people may be against this investment, but from what I can tell, I think it’s going to be very important,” Zuckerberg said.
The problem there is more of a “will” than a “is”. There’s little doubt that the day will come when the Metaverse will deliver at least some of what it promises, but that day may be far ahead of many technology investors think. And right now, Meta trying to take the land has gone too far and distracts from the very real business pressures we face in our current core business.
“Meta is flowing into a world of excess. Too many people, too many ideas, too little urgency. This lack of focus and fitness is less noticeable when growth is easier, but , growth slows and it becomes lethal as technology changes,” Altimeter Capital, a leading meta-investor, told the company. in an open letter Ahead of the earnings announcement on October 26th.
Gerstner said the company should cut headcount (having grown from 17,000 to 87,000 employees in six years) and reduce investments in both artificial intelligence and virtual reality. In fact, he wants to cap investments in the metaverse at $5 billion annually.
Whether he gets it is questionable. The company estimates that 2022 total expenses will be in his $85 billion to $87 billion range, but his 2023 expenses will be lower despite attempts to cut costs and freeze most jobs. , to be about $96 billion to $101 billion.
It’s worth pointing out that 16 months ago, Meta was valued at over $1 trillion. By the end of Thursday’s play, he was worth $270 billion.
Elon Musk is thinking of adding this to his collection…