Meta Earning Results Q3 2022 [pdf]
s21.q4cdn.com
s21.q4cdn.com
Realistically they had one big growth avenue and that was acquisitions but the regulatory (or rather political) environment doesn’t allow for it.
I get that it is hard to let go of that growth mindset after 20 years of crazy growth but at some point the journey ends and you have to reorient the business (imo). I am not saying stop investing but scale it down a notch, set realistic budgets, pay a dividend or buyback stock. Maybe if they had shifted their mindset away from growth at all cost earlier they wouldn’t have gotten such a bad rep.
I feel the same about Google. I wonder how much money their non-ad, non-cloud stuff made of its life time and if it has been profitable.
In the end the goal of a company (whether you agree with it our not) is not to get as big as possible but to generate as much cash for its shareholders as possible. And I think Facebook over extended with going all in on Meta.
But perhaps I am looking at this with too much hindsight.
Facebook's goal is to do whatever Zuckerberg wants, since he still controls a majority of the votes. It's a fascinating test of the value of corporate governance rights.
Think about it this way: Giving 20 billion in new equity per year when the market cap is a trillion dilutes everyone 2%. When the market cap is 500 billion you are now diluting everyone 4%.
When the company is growing you don’t see the dilution as the increase in stock price is much higher. When it’s static this drags your shares down over time.
60-80% of the cost base in many F500s is bullshit (exceptions exist. FMCG, any industry where physical products make up their balance sheet. Not salaries). Any excuse to avoid returning money to shareholders.
Everyone quietly acknowledges. If say, Visa, really tried, they could cut the cost base by 50% and achieve the same output.
Carl Icahn style shareholder activists have a point.
Forget tech companies. Most public companies are a conspiracy by VPs/C-suite/board.
The difference with tech companies is Google feather-beds its EMPLOYEES with free food.
From a pure capitalist standpoint. You could run Facebook's business on 20 billion USD in costs. Their cost base is enormous because Z has ZERO interest in cutting costs.
He's in it for the ego/vanity. Same as every other F500 CEO/Chairman.
Ego is the driver, not the balance sheet.
Carl Icahn story about cutting costs: https://www.youtube.com/watch?v=WSatPoD2W-o - fired a building full of people, never heard about it again.
Most companies are run as bureaucracies, dual share classes haven't helped. There is no difference between your average Google employee and a civil servant.
Unfortunately, this is a pretty raw deal for shareholders. You cash out insiders, the bureaucrats move in, the amount of cost extends to the revenue base, eventually revenue slows down (bureaucrats don't tend to be good stewards of capital), the rats all leave the ship, you find out the cost base could have been 50% smaller all along, and you are left with a stock on its way to bankruptcy.
> What is clear is that Zuckerberg in particular seems more committed to VR than ever. It may be the case that he is seen as the founding father of the Metaverse, even as Meta is a potential casualty.
My guess is this is going to be a really rough winter / several quarters for Facebook until they reconsider.
There’s really only one company in the world that’s able to do that better than anyone else. You guys know which company that is.
So it’s very very hard for them to be as successful in that space
as part of an already very good compensation package.
- We should go for something akin to universal basic income? Given we could produce a bunch of output with very few people (I guess at that point it's more and ideological question of if these few people that get to stay + shareholders are going to get all that value rather than someone else) - People that are talking about "productivity growth" has declined the past 20 - 40 years, are probably wrong and we have seen productivity growth, we've just filled it up with useless stuff and made up jobs? - It also sort of implies that some of the projects that Google and Meta has taken on even though not financially sound right now haven't produced any value for humanity (and I fully understand that in a capitalist society; profits are the way we value things). I think they have and a lot do (like long tail stuff like producing knowledge, producing open source tech, driving tech that while not mature now, will explode in the future, VR + self driving comes to mind)
Another thing that comes to mind when it comes to founder driven companies doing whatever they want is all the Elon Musk companies. He has also made a bunch of crazy bets that "value"-companies would def not have made.
They can extend that to these voting class shares imbalances and start a cascade of changes
People who value stability and work-life balance. It's great for people who see a job as a way to fund life and put something away for security later in life, not as a calling they're willing to sacrifice everything for.
No, Mark wants a war chest and will increase investments for his meta verse.
But I would never bet against Mark.
I remember when Facebook was invite-only. It was cool. Everybody wanted in. This... I think this is grounds to bet against Mark.
You didn't read TFA, the earnings report explicitly saying the significant amount of buybacks they did.
No buybacks, like this?
I think that's part of the problem to be honest. People who have a reputation for never making mistakes tend to double down rather than acknowledge the mistake and back off.
Imagine going straight from your early 20s into a position where you're hailed as never making a mistake. IG, whatapp, etc all panned out. What happens when you finally do spend $2billion on a failure such as oculus? Do you note the failure and back off or do you start spending $20billion a year, change the company name and double down (to the power of 8)?
Anyway at least this instance of it is more harmless than Putin's example in global terms. It's still reasonably clear to me what's happening though.
Last Q they made 209m in revenue on other bets, and lost 1.6b on those bets.
The only profitable business for Google is Ads.
Cloud, and other bets burn about 3b dollars every Q.
June 30, 2022: $5.233B
March 31, 2022: $9.506B
December 31, 2021: $20.06B
September 30, 2021: $13.46B
Man, why does everyone have the same values nowadays as Milton Friedman and The Warthog?
Relevant video clip: (NSFW, very offensive language) https://youtu.be/7j1850-qlm8?t=19
Facebook's (stated) mission isn't to make money or get big, it's to bring people together. If they can make VR user-friendly and ubiquitous, I think that will serve their stated goal.
If Facebook just decided to hunker down and count their money, they'd be doomed to eventually fade away just like so many tech juggernauts have in the past.
The business plan so far seems to be:
1. Make VR work
2. ???
3. People come together!
Smallprint: make lots of money along the way...
I am interested as to whether there exists a concrete plan for step 2 but I am dubious of this direction.
Difficult to make them come together without throwing up, literally. I almost got to the point where only thinking about the abstract concept of VR makes me a little dizzy.
But the logic goes something like this: Zuckerberg has built a $1 trillion company already => he knows what he's doing => we should trust him with the tens of billions of dollars he's throwing at this, trust him that is compared to the schmucks that say that this won't go anywhere, they haven't built $1 trillion companies themselves.
I predict that around the mark of $100-150 billion thrown down the VR drain some share-holders will actually start to throw some hard questions at Zuckerberg, and in another one or two years after this the project will have the fate of Google+.
and
> the journey ends and you have to reorient the business (imo)
Isn't that the point of reorienting themselves to the meta verse. It is a new, unconquered land with virtually unlimited space and possibility?
Arguing against myself now: while this might be true from a product standpoint, their business is advertising, so unless they find other ways to monetize, the growth rate is limited by advertising dollars / share.
Look where they were in the mid 90s when they were already 20 years old compared to where they are now.
Apple and Microsoft are much more mature companies than Facebook is. Microsoft had major restructuring a couple of years ago. And I think Apple also had some major reforms internally around 2015-16 to make its operations more efficient. Apple accumulated a massive amount of cash over that period.
I am not as much into it anymore as I sold most of my holdings near the end of the pandemic. So maybe things have changed since then.
Netflix is another company I have serious questions about. Not sure about their current situation but around 2017 when I looked into them, they were essentially a company that sells you a dollar for 99c. Their ratio internal content/external content was not high enough which meant they had massive recurring licensing costs which they funded by a mix of subscriptions revenue and debt (a lot of debt). The story was that that would be ok once they reached ‘scale’ as costs would be the same but they would have more subs. In my opinion that logic is flawed since presumably the cost of the licensing deals will also rise as more players entered the market and content holders got less money from traditional sources (because everyone uses those subscriptions services now). Netflix made sense when they were able to buy the content for cheap because they were niche.
My opinion of course. Im just a random dude on the internet.
On the Apple side, the iPod, iTunes, the iPhone, the iPad, and the watch were all unproven projects.
On the Microsoft side, giving up immediate revenue from selling Office for $600 - seat into a subscription service for $69-$99 a year had to be a short term revenue hit. Not to mention XBox which loss billions before becoming successful and Azure.
Meta doesn’t have a choice. I really hate the Facebook product. Not because of the privacy angle, it commits the worse sin of any product - it just sucks now. Most of the post I see aren’t even from people let alone brands and websites I chose to follow.
That's like asking Apple how much money it made from sources other than hardware sales and online service sales.
At least from my experience.
META more than other big tech companies has been scaling back significantly this year and were one of the first to do so.
They're also buying back a ton of stock and with operating margins in excess of 80% it's almost insane how conservative they've been with spending money over the years. This is hardly a "growth at all costs" company. This is one of the most profitable companies ever.
META also isn't going "all in" on the Metaverse. They're investing a portion of their cashflows on AR/VR technology. The media is so focused on the headset that I think people are missing the fact that in a lot of ways META is inventing the wheel that will support the AR/VR products of the future. Even if they don't make a success of their Metaverse, their technology will still have real value to the ever increasing number of companies operating in this space.
TL;DR: META is trading as a value stock, they are cutting back, they are returning a ton of profits to shareholders, and they're not going all in on growth or the Metaverse.
Part of the reason Meta is crashing is because they are being even more aggressive/spending more on metaverse next year than they previously stated.
19% growth in costs while having -4% revenue over the year ago quarter.
https://investor.fb.com/investor-news/press-release-details/...
At the same time it feels like the Apple Lisa. Expensive hardware that’s clearly still not quite the end state, shipping with first-party software that’s barely past demo quality. There’s simply not very much to do on the Quest Pro so far, and the HoloLens trajectory suggests that real apps will be slow to arrive.
Still, it’s an entirely new style of computing and Meta has subsidized it by tens of billions of dollars already. I’ll try to enjoy it while it lasts.
It doesn't inspire much confidence in me to compare it to the product that everyone thought was cool when it came out but over a decade later, even the company making it still doesn't know exactly what it's for outside of a few niche use-cases.
It's a $30 billion a year business.
Maybe they know a little more than you think.
I just don't understand why humans buy them. Sure, they're neat, but there are a lot of neat things at that price point.
To me, an iPad is a notebook that's always with me, where I write down all my thoughts in my journal, practice writing and screenwriting, do task management and planning (most of that in Obsidian). I also watch video courses, listen to music, browse the internet, all the stuff everyone uses their mobile devices for.
Smartphone is too small for typing, and not as convenient, no other tablet is anywhere near as convenient to use. iPad mini is the perfect form factor for me.
This shouldn’t be hard to understand.
Every boomer in my life has an iPad. They don’t own computers anymore.
If all iPads disappeared off the face of the earth tomorrow, it wouldn't be nearly as big of a deal compared to if that happened with smartphones or laptops or PCs, etc.
Meta has a big hurdle to overcome to make success out of a device with no real practical use so far, and one that you have to strap to your face.
Many people have replaced their laptops and computers with an iPad because they only check email/Facebook/watch youtube/surf the web.
Also word processing/publishing. Very clear applications with an existing market.
"Built for a Future That Still Isn't Here" is a headline I saw somewhere that resonates well with your comment.
Also, I can pet my dog and even throw him a ball while writing comments on HN, but the VR thing will totally isolate me from him (and the AR thing won't bring anything new to the table, I already know my dog's name, don't need to see it labeled via AR). And even so, I try to limit the time I spent in front of my computer, glueing even more immersive computers to our faces won't do us any good.
Can't you play Quest 2 games on it?
2019: Net loss of $4.5 billion on $501 million in revenue
2020: Net loss of $6.62 billion on $1.14 billion in revenue
2021: Net loss of $10.19 billion on $2.27 billion in revenue
2022: Net loss of $13.21 billion on $1.72 billion in revenueWith the amount of R&D that was spent on Metaverse, it better shit gold for Meta for decades to come.
I was still on the 10B figure. At this rate they are going to reach 50B pretty soon.
What is the limit? 100B?
I understand why this is taking time, R&D and stuff, but I have some difficulties to understand how they manage to burn that much money.
An ecomm company in the UK went bust today, Made.com. They had a decent business, they sold furniture online, but their main issue was cost. All obvious, they had hundreds of people working in single divisions, it made no sense at all.
But they never attempted to cut cost until it was too late. I have seen this before, and it isn't "forgetting"...it is a physical capacity. You hired the 32-year old guy, he has only ever hired people, and you tell him he needs to fire 10% next week...he will start ducking you, what do you do? You can't fire him now, you need him to fire everyone else...most companies can't turn it around in time (Made was also run by people like the 32-year old, "entrepreneurs", everything will turn around soon).
We could say that they've spent on the order of 10 gigadollars.
What’s more baffling to me is that we’re now several years into this “bet the company” XR pivot and nothing really seems to be coming to fruition. Yes they sold a TON of Quest 2s - via a financially ruinous subsidy and then everyone tossed the device in the back of their closet.
They’ve spent a ton of money buying every successful VR game studio they could get their hands on for three years - and still have NOTHING but a handful of BeatSaber music packs to show for it.
The Quest Pro was supposed to be positioned as a less expensive HoloLens for businesses while also getting Meta some real world experience with eye/face tracking. Thing is: the original device was supposed to have a depth sensor and it got removed at the 11th hour. Which, imo, completely ruined the HoloLens-lite positioning since the only AR differentiators over the Quest 2 ended up being slightly upgraded SLAM cameras and a janky color overlay. All the meatspace positioning had to be offloaded to an already over-worked Qualcomm SoC. And without those advanced AR capabilities, the Quest Pro is essentially an upmarket blend of the Quest 2 and the Pico 4.
Which leaves the Quest 3. And we’ve seen enough of it from leaks to know it’s actually a compelling upgrade to the 2 - but it’s not expected to launch until 12 months from now. And it’s certainly not representative of what you’d expect from xxx billion dollars worth of hardware R&D.
This comment is already too long so I’m not getting into the Metaverse thing, but it’s probably the biggest failure of them all.
Tl;Dr: Imagine if Google launched Stadia along with an announcement that they were pivoting to the console market. Meta’s VR pivot is ALMOST at that same level of a self-inflicted mismanaged disaster.
At that rate, they'll have a $17.2 billion net loss on $2 billion in revenue for 2023...
... and then everything will be fine.
Second, how are they generating $1,7 billion dollars in revenue from the Metaverse?
There are a lot of cool things you could build on top of a verified identity.
Even if VR and AR pan out I doubt apple would lose. They just have too much control over the entire stack.
How Microsoft and Google, and Meta allowed Apple to slowly build over independent control of their entire ecosystem, from supply chain to software is baffling. They’re gonna get wrecked.
Yet from a business' perspective, the experience is really poor. Most have to rely on third party tools to sell and chat with customers.
Progress is being made on this front, albeit slowly.
They did seem to make a push for more business API and more marketing messaging permissions. I invested some time in developing it for political campaigns.
Only for them to yank the more open permissions away.
And much of Europe.
The failure to capitalize on their userbase with accessory businesses probably has more to do with the VC/Silicon Valley obsession with the hot new thing and what they hope will be the next new hot thing. Commerce is boring, TikTok and VR platforms are much more exciting.
They've tried these things - you mentioned an example of one yourself.
They're trying this in India through WhatsApp by patterning with Reliance.
https://about.fb.com/news/2022/08/shop-on-whatsapp-with-jiom...
Apple won't lose but equally they won't dominate.
There will be a space for an open, collaborative market leader exactly what Meta is positioning for with their recent partnerships e.g. Microsoft.
And if you ignore the metaverse nonsense and extrapolate hardware advances over the next few decades AR/VR could be compelling. It could replace laptops. It could change what travel, concerts, arts events looks like. It could democratise education.
I understand Meta is trying to generate hype and attract talent but I also hope that we do get far more serious at what AR/VR could mean.
Google didn't. They built Android and Chrome and ChromeOS to counter that issue and frankly it's been widely successful.
Microsoft tried (but failed) with Windows Phone.
Semicos, Google, Facebook, MSFT
In no other company would a CEO be allowed to essentially go rogue like this. All companies with dual-class shares will eventually trade at a discount, this is FB's time.
I don't even think the Metaverse is a bad idea, but applying the SV mentality of: we just need to lose more money than anyone else won't work, that isn't how the real world works unless you have someone even dumber to pay you off (i.e. stupider VC fund, IPO)...FB is top of the food chain, no-one else is coming in on this.
They either need to slow the cash burn (the numbers are just ludicrous) or spin the company (not possible).
This kind of thing happens and the discount can last literally decades. With dual-class share, there is no way to close it and most investors know this so they are just selling.
I will say it again: dual-share class isn't smart, the market isn't dumb, investors aren't stupid, it will go wrong eventually and everyone else is paying the price for Zuckerberg's own desire for self-aggrandizement.
To be clear though: he has created this situation. If he lost a reasonable amount of money, none of these questions would be asked. Anything north of $10bn is just madness, $5bn is bad, $2-3 is probably about right. It is all sustainable within the current situation, he just has no-one telling him how bad this all looks (what it looks like now is the opposite of the final scenario: man who is worth hundreds of billions rinses public shareholders for his fever dream VR fantasy).
Innovator's dilemma is all operational, so it should be separate from FB. Capital allocation choices are distinct from all this (the innovator's dilemma exists because CEOs are usually terrible investors/capital allocators, there are maybe 20 CEOs who have ever run a public company who can allocate capital well, Zuck actually had a decent rep before this because of his acquisitions but he is torching it with VR, which is clearly very far from commercial revenue).
I wonder if Meta would be going all-in on a VR system that nobody seems to want if Sheryl Sandberg were still around. She seemed like the only one who could say no to MZ. Granted, there are lots of other factors (TikTok, recession, Apple's privacy changes), but it is an interesting coincidence.
Actually, it happens all the time. The business press had been full of these sorts of characters for centuries.
Currently, even within the HN bubble, there's Mr. Musk, and several others.
This is how literally ALL the technology you use was developed. Huge, multi-decade spending on R&D until it works. Literally any technology you can think of.
I can't think of any technology that required multi-decade spending on this scale before revenue, fusion? If something needs multi-decade spending, it is either a scam or uninvestable.
What do you call a stock that's down 90%? A stock that was down 80% and cut in half again.
VR strategy fails, acquisitions stop due to regulatory issues, loses ad marketshare to Apple, TikTok continue to eat its lunch. As a result, stock gets even lower.
There you have it. Is this a very strong argument? Probably not, no, but it's a possibility.
Is it though because the data doesn't suggest that.
It suggests that TikTok is dominating amongst younger audiences and that short form video content is a specific segment.
The question you should be asking is what are the company's earnings growth prospects going forwards, and how does that compare to the stock's current valuation.
Everything was taken back to pre Covid levels. So if you can imagine we are back in 2019, whatever Facebooks price was, plus declining user base, and the Apple fuck you, it has room to drop.
Example: the share price of K-Mart was 134 dollars in 2007. Now it's 15 cents. And people were buying the dip all the way down. Think it will come back?
After all, no company lasts forever. Eventually they all go to zero and are replaced by some other company. That's why buying the dip just because it's a dip is a fool's game.
https://finance.yahoo.com/quote/SHLDQ/
Does not seem that great of a gamble for a few thousand dollar gain at most. Las Vegas seems like it would be more fun.
If you think that $69 is a good price to pay for CSCO I’m happy to sell you as many stocks as you want.
Why do you believe it'll go back up from this price point instead of dropping another 50%+?
So while they are still insanely profitable for their core business the growth story is over.
The only way I see them recovering is regulatory action, either:
1. The White House bans tiktok, (hopefully, in FB's case) shifting TikTok's eyeballs to Instagram.
2. The White House forces Apple to undo informed tracking consent.
Personally, I believe Facebook was digging their own grave in 2010 and handled the privacy problem incredibly poorly. While consumers were unlikely to stop using Facebook, it left them wide open for Apple to kneecap them and now Zuckerberg's, likely correct, concerns that Apple doesn't really care about privacy falls completely on deaf ears.
Neither of the things you mentioned have any impact on 90% of Facebook's users.
Zuck needs to push his lobbying minions to make that the full-court press on Capitol Hill.
If you look at history, everything converges back to fundamentals in the long run; as many tech investors are starting to find out.
But to answer more directly, the current price is only good value if Facebook can grow its earnings over time. Right now they’re shrinking.
Companies with shrinking earnings tend to get single digit multiples
Do you know anyone who uses Facebook any more? How many Instagram users you know look at the ads?
the concept relies on an idea of aggregate information converging to an average best price in advance of the information being available to all. it relies on someone smarter than everyone else recreating all financial inputs to the company and having enough capital, risk profile and time horizons to exercise that opinion. When even that stretch of the imagination can be undermined by someone richer just wanting to get out.
Price people will buy/sell = function(their predictions of the companies future)
Considering Meta's business is advertising.
The fact advertising revenue is flat in the Americas & Asia is a strong signal companies are not cutting advertising. Ergo, no massive collapse in consumer confidence is predicted.
It's just Europe that looks dire.
Or at least that's what Meta wants you to think.
It's in the first bullet point on page 2:
Revenue was $27.71 billion, a decrease of 4% year-over-year, and an increase of 2% year-over-year on a constant currency basis. Had foreign exchange rates remained constant with the third quarter of 2021, revenue would have been $1.79 billion higher.
EDIT: who thinks there would still be explanatory wording added here if forex rates had moved the other way and revenues had gone up ... ?
Certainly was the case for me. I certainly overpaid for a lot of things recently. But we had our big festival here this week and now I'm tapped out. Next year will be a year of sobriety - at least for me.
https://twitter.com/coldhealing/status/1561022408206729216
A lot of the lavish perks they’ve showed have been part of these companies since these two young women were toddlers. It’s privilege discourse meeting the cringey nature of TikTok.
Metas real problem is TikTok, Apple and the cultural zeitgeist
I can't help but conclude that the problem is that it's presented by a young woman.
You saw this kind of thing at investment banks pre-08, people who did literally nothing, created no revenue, they were just a $200k/year plant pot, left the industry in 08 and never came back.
From what I have seen, the situation in tech is worse...I am not even in the US, and have interviewed at places where cost is obviously out of control but they hired this guy with a CS degree who has literally no idea how to run a business (one place I interviewed at, the unit built the front-end for a savings product, iirc they had five sprint teams, each team had 3 business analysts, 1 PM, 1 test dev, 2 devs...it was madness, and the guy interviewing me was maybe 30, no business experience, had worked as a "senior dev" at Wipro or some other consultancy place, this guy couldn't even get people back into the office, no-one would go).
I think people have been in the machine so long they forget what reality is. Reality is here now, everyone is getting fired, the free money machine has been turned off.
With a hint of ignorance and jealousy.
Yeah it was particularly funny that it was posted on Tiktok not Instagram.
She was sharing it on TikTok, that's the problem. If Meta product people have already stopped eating their own dog-food then something is very amiss.
Nothing new on the internet.
People even take entire movies and mix clips around to change the storyline entirely.
fine? I don't get the hubub
Rewind a few years and people were calling for antitrust actions against Facebook for their market dominance. Some still are. This never concerned me and I needed no better evidence than Instagram. Instagram popped up out of nowhere and was an existential threat to Facebook with 13 employees when Facebook bought them for $1 billion.
If in the space of a few years something can appear and threaten your very existence then you aren't as dominant as people were making out. If it happened once, it will happen again. And it has: a lot of particularly younger people (a key demographic) use Snap. And you can't ignore Tiktok, which is rapidly eating Facebook's attention economy.
The big problem for Facebook (sorry, "Meta") is they have no plan for the future. Oh, sorry, there's the Metaverse. That ain't it. There is absolutely no evidence that VR will ever be anything more than a niche. There's the argument that this will eventually lead to AR but once AR becomes viable (if it ever does) then Meta will be in the same competitive boat as many others because a VR headstart is no headstart at all.
So how long can Meta milk the advertising teat before drastic change is company strategy is called for? I'd say that's coming sooner rather than later.
> We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year.
Yikes.
Not sure why anybody is expecting it to be profitable at this stage in its lifecycle.
They simply are burning way too much money for an R&D phase.
Are they building giant factories or something?
I don't think it's fair to compare Meta against companies like Apple when they have up until now been almost entirely a software company.
I mean they're still making money. Mark doesn't give a shit about short term stock movement, why would he care about the division that he believes is the future of the company and maybe society losing money?
But to put things in perspective, the entire R&D budget for the first iPhone was $250M, and I don't think it was highly optimized for cost.
10B is 40x higher. And this is an average year, for an unfinished product that did not even start from scratch (they started with the Occulus Rift, a pretty advanced prototype)
And I can't help but reflect back to 1987 when AAPL was 27 cents a share and Jobs (at NeXT) was expressing his concern for the massive (a million a month!) cash burn rate at NeXT.
> We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year.
Interesting.
Literally every piece of technology you are using right now followed this model. Spend lots of money over many decades until the technology is developed enough to be valuable. Hell, VR is a technology that the federal government spent lots of money over multiple decades in research labs until they finally turned it over to the private sector.
VR has been in development since the 1960s when Ivan Sutherland put his brilliant hands on it. Look up The Sword of Damocles.
That's right folks, you are playing Beat Saber because the government spend 50 years developing the technology and components that scrapy startups were able to use to develop private VR headsets.
Now Meta has enough cash to act like a small government because it has monopoly status. Kind of like how AT&T was expected to do heavy R&D for the privileged of being a monopoly. Where Bell Labs developed the transistor. Keep in mind, the transistor at the time was so expensive that the only customer was the government.
So as long as Meta keeps being a monopoly, they will be expected to keep doing a lot of R&D.
I know there are external macro issues - but fundamentally you have to choose between two interpretations of this data.
1 - They've blown it badly over the last 7 year (strategically, but also at an execution level). And it's all been covered up by a bull market and cheap capital. 2 - But the metaverse!
> FREE CASH FLOW
>
> 3MO 2022 3MO 2021 9MO 2022 9MO 2021
>
> $ 173 $ 9,547 $ 13,151 $ 25,876
But yeah, it's down bigly. So is their net income.
The way I see it is:
- From Jul - Sep 2022, the net cash provided by operating activities minus their purchases left them with $173M.
- From Jan - Sep 2022, the net cash provided by operating activities minus their purchases left them with $13,151M.
So yes, this quarter wasn't great as they only had $173M cash leftover. But their previous two quarters were good enough to leave them with $13,151M - $173M = $12,978M free cash flow.
It's just that in Q3 they only produced $173M free cash flow. They still have $13,151M free cash flow produced since Jan 2022.
Q1 was 8,528
and 9 months ago it was 13,151
Now its 173.
Approximately 4,000 per quarter for the past 3 quarters..... Pretty crazy.
Yikes!
And yes costs are up but they are having to do hardware R&D that they have never done before.
Yeah, but flat isn't much better.
I’ve thought for a couple years now Zoom would make an interesting target for them- a huge built-in enterprise audience, one of the last remaining independent video conferencing companies with (imo) best of breed engineering and product and now beaten down valuation and meetings are the main focus area for VR right now.
Metaverse just feels like it’s trying to be a “premium” version of reality, that comes at a premium. Seems like such a small target audience to spend so much money on, when across the spectrum of people I know, would rather meet up IRL, or go disconnect from technology..
Some of the tech is neat, and probably innovative, but think no one is as hyped about this as zuck. Also no one likes zuck.
Oh wow, that was misguided. Other companies have been slowing down hiring significantly (especially after the war started in February). I don't see how they'd get out of this without layoffs (which is generally bad for the whole industry).
Mark Zuckerberg has a $10 billion plan to make it impossible for remote workers to hide from their bosses [1]
China believes mass surveillance will help it engineer the perfect society [2]
There's no sex in the Metaverse champagne room
[1] https://fortune.com/2022/10/18/mark-zuckerberg-meta-avatars-...
[2] https://www.codastory.com/authoritarian-tech/china-surveilla...
LOL - love it ;)
Sex sells but it doesn't pay the bills. i.e. you can't be coding Zuck's metaverse while having sex.
I'm a fan of VR too. But the metaverse is either going to be the most amazing thing or the most dystopian thing that humankind has ever created.
Some other process will create the amazing virtual universe. I'm hoping for a grassroots open source virtual universe will arise in much the same process as the early internet.
I imagine there are an equal number of people that could convince him to continue, in case he is right. This appears to include Apple: https://9to5mac.com/2021/11/25/kuo-apple-plans-to-replace-th...
I think the negative feelings towards all of this will flip, if Apple decides to release something.
15 years ago when someone introduced me to FB I called it FarceBook.