Meta Reports Fourth Quarter and Full Year 2022 Results | Hacker News Reader

Meta Reports Fourth Quarter and Full Year 2022 Results

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165 pointskgwgk278 comments

Up 17% in AH, on top of huge gains over the past 2 months. Nuts. It looks like it really wants to get back to $300+ It shows how all this talk about metaverse losses was overblown. This is why my best piece of financial advice is to tune out the media. By the time something is a narrative, it's too late. If the media is talking about how Facebook peaked or is the next myspace, this is time to buy. Same for Netflix.

Metaverse notwithstanding, Facebook and Instagram are still huge cash cows. Ad CPCs are really high, especially mobile ads. Companies, especially in financial services and healthcare, paying so much $ for clicks to target older people, retirees, etc. and also people with medical problems. Obesity epidemic means more healthcare spending, same for people living longer.

> Facebook and Instagram are still huge cash cows.

I wonder what that makes TikTok then? Do we have any insight into how much ad cash Facebook + Instagram generate compared to TikTok?

$5B last year 2022.

https://www.statista.com/statistics/1305708/tiktok-ad-revenu...

TikTok still losing money though

Operating Loss At TikTok Parent ByteDance Topped $7 Billion Last Year, WSJ Reports [1]

[1] https://www.wsj.com/articles/tiktok-parent-bytedance-sees-lo...

Their infra is more expensive- all content is decent quality video instead of text and fairly low res images - and from what I can tell the ad network is not very robust. Not too surprising

It feels like only 3 months ago I was repeatedly trying to convince HN readers that Meta was a great investment opportunity at a P/E of 9. In fact, it was…:

https://news.ycombinator.com/item?id=33572187

Markets aren’t efficient. People are biased and can’t look past them.

There’s quite a bit of knowledge on HN. As a group, we could do much better understanding the markets.

markets are irrational except when it goes up 17% AH ?

Rather, the market is irrational whenever it does anything that I disagree with, and rational otherwise. Trust me, I'm a rational human being.

Markets measure the tiny fraction of buyers and sellers on a given day and ignore the super majority of holders. It almost feels like length of ownership should be more determinative of price movements than anything else. If long-term holders start selling, it’s concerning.

> Markets measure the tiny fraction of buyers and sellers on a given day and ignore the super majority of holders.

Not really. The decision to not sell and to not buy is itself reflective of the price. If a stock is super cheap, people will buy. If the stock is priced fairly or overpriced, few people will buy. Same goes for selling.

It almost feels like length of ownership should be more determinative of price movements than anything else.

>> Length of ownership AND relatedly original cost basis. I think a lot of stocks can seem to defy gravity (i.e. high PE and/or high P/FCF) when the founder and the early investors HODL stocks. At $0.0001 per share, HODLing (in say TSLA, META, MSFT, BTC) is easy since there is/was no upfront capital paid in and holding has essentially no cost basis - so there's no need to act like rationally like a later stage investor.

>> Founders and early investors can easily own up to 30-50% of the company and really its only when the founder retires/starts diversifying and the founder and early investors start to unload - does price discovery occur on the entirety of the shares outstanding.[1][2][3]

[1] Mark Zuckerberg Sold Facebook Stock Nearly Every Weekday Last Year For Almost 11 Months https://www.forbes.com/sites/rachelsandler/2022/01/06/mark-z...

[2] https://techcrunch.com/2013/02/15/zuckerberg-now-owns-29-3-p...

[2] Amazon founder Jeff Bezos decreased his stake to 24% from 42% in the first nine years after IPO.

Agree. I think that fully explains all of TSLA’s movement. Mostly HODL but then Elon had to sell into light purchasing. Since he stopped, purchasing again outpaces selling so we get a steady rise.

How much money did you make by doing this? Talk is cheap...

No one could have predicted they’d buy back such a ridiculous amount of their own stock.

Really? Meta bought back less in 2022 than they did in 2021.

Exactly.

Huh? I think you are confused.

People forget that stock buybacks also created a pool of equity for employee compensation, it isn't just about returning capital tax effectively.

The point is that there was no way to predict the level of stock buy backs announced.

You said there way no way to predict they could buy back so much.

But basing your expectations on 2021 would have done exactly that. So that argument is wrong.

If your real/amended argument is "no way to predict the level", as in predicting the exact amount, that's a much weaker argument that has barely any ramifications for investing. The specific amount is generally much less important than going over/under some threshold.

If it was so obvious large quantities of the stock would’ve been purchased even if the price was depressed. Were there any notable investors purchasing large quantities in expectation of this?

I didn't mean to imply it was obviously correct.

But it was obviously a plausible outcome.

Predicting it only took very simple and reasonable logic. "I bet the number stays the same."

A sports analogy: There's a game tomorrow where one team has 30% odds of winning. If someone bets on that team, nobody says "no one could have predicted that". It's obvious that it could happen, and it's plausible that it could happen. Tons of people predicted it.

And large quantities of the stock were purchased. There's tons of trading happening every day.

It's not like the people that expected a large buyback were acting in a vacuum. Stock value follows the average. To push the sports analogy, the team stock would still be going down even though many people are betting on them.

They barely bought more than last Q (500M more) and 3 times less than Q4-21. Nothing extraordinary with this buyback, they even have a few B authorized remaining.

The only surprise with the buyback streak since last year is how poorly executed it was. They dumped $45B ahead of anouncing a decrease in DAU, then trickled after it tanked the stock.

It isnt meant to support the stock, it is a compensation pool.

Neither, it's way higher then SBC and outstanding shares are decreasing.

It's cash returned to shareholders.

Stocks are priced on future events

$7bn in Q4 is just like the $21bn in the three previous quarters - when the stock was going down - and doesn’t seem so unpredictable.

You could see they had free cash flow.

Is that a better use of capital than investments to grow the business?

Markets aren’t efficient. People are biased and can’t look past them.

I think they are efficient most of the time, but there are edge cases that allow for higher risk-adjusted returns than predicted by a purely efficient framework. A notable example is Renaissance Technologies.

In the last 3 months the entire market has come back up. I have safe agricultural stocks that have risen nearly as much in this time. FB bouncing back and having a low PE doesn't make it a good investment. People are looking longterm at their prospects and where they're dumping their cash and they don't like it.

The S&P 500 is up by about 10.7% in the past three months. Meta is up by 72.2%.

unless you timed it perfectly (tl;dr you didn't) Meta was off by way more than the core stocks in the S&P 500 too

Unless you quantify how many agricultural stocks are on the S&P, you're not addressing his point.

Including the after hours jump today, Meta is up about 92% since Nov 1 (3 months ago)

Even with that, it's still down by 50% from a year ago.

Meta is up by 100% if you count today's movement.

HN is the worst place for investment.

The smarter the people, the bigger the ego and limited the vision.

Between ArsTechnica, HN and reddit and you can bet against popular opinions on this. You can also identify cult formation too.

Even Paul Graham tweeted that crypto had a systemic risk. Bitcoin is up like 30% since that tweet.

HN != Financial advice

So hard to tell if HN is telling me to buy Bitcoin or to sell Bitcoin, sometime.

Thinking that anyone knows which way Bitcoin or a stock will go in the short term is foolish (unless they have insider info)

This argument is equivalent to saying "Someone told me that Russian Roulette is dangerous, but I didn't die when I played it, so they're wrong."

Systematic risks are still risks even if they don't manifest and if you want to argue Paul Graham is wrong you have to argue why the risks aren't risks.

(I don't know what risks he pointed out, so I don't know whether I think he's right or not)

In your view, in what sense are alternative outcomes are actually statistically probably. It sounds to me like you're saying:

when the tweet was made the universe was about to make a dice roll. There was a probability that bitcoin went down and a probability that bitcoin went to the current price, and the universe rolled and happened to land on the current state, but the others could also have happened if luck had gone another way?

I'm not sure why you're trying to pigeonhole my world view into a dice roll example. The core point I'm making is that something doesn't become "not a risk" just because you didn't fail.

If we're talking about the dice roll example, just because your rolled a six, it doesn't mean that rolling specifically a six wasn't more unlikely than rolling a number from 1 to 5. Which means that if you planned (either explicitly or implicitly) on things working out in a way equivalent to rolling a 6, then your plan was risky.

Yes, I am doubting that big events in the economy function like dice rolls. When you say it's a tail risk, you're talking as if that outcome is actually realizable.

This viewpoint renders the word "risk" meaningless. Something isn't a risk if there isn't some sequence of events that can cause it to happen.

And even if we lived in a deterministic universe, we don't have perfect information, so we cannot know the outcome of big events. Our best way to deal with them is to model things probabilistically based on what we do know and make our choices based on based on risk/reward.

I'm also not sure where you're getting the phrase "tail risk", I didn't even know what the term meant much less used it.

I agree that risk is about lack of information. So I don't think PG could have been right. He has his view of the market, and other people have theirs. Turns out, he was missing a lot of information.

I guess I can see some crazy combination of physical objects colliding and nobody being able to predict where they land, I'm just not sure thats the right model for valuation of an asset.

> tail risk

Sorry if I introduced that. I just meant that it's occurrence far outside of the regular distribution.

The point about systemic risks is they don’t go away just because they haven’t happened yet.

For example, Bitcoin is up, as are most investments. It’s unfortunately also correlated in the other direction with the stock market so if the market tanks next month so does Bitcoin. But the link doesn’t go away if the stock market is fine, so Bitcoin could also crash in 2 months when the market tanks, or in X months… aka the risk is from the correlation not the short term outcome.

As to predictions, the best evidence we have is the universe isn’t deterministic. Quantium mechanics has everything rolling dice. So saying X didn’t happen therefore X couldn’t have happened appears to be inconsistent with how reality actually operates.

The quantum mechanics is a cop out, since everything observable at the scale of our lives is compatible with a determinism. Only experiments at microscopic level can falsify it.

> The point about systemic risks is they don’t go away just because they haven’t happened yet.

I agree. But observing a state of instability or unpredictability is different than saying "X economic event a 10% chance of happening".

Did we ever get more details about what he was talking about?

Options and theta gang subreddits aren't too horrible. At least you have rational argumentation mixed with probability hedging strategies.

That goes to the full discussion of an unrelated story. Direct link to the subthread where you made the FB comment:

https://news.ycombinator.com/item?id=33573232

(Edit: I would have referred to the company as Meta, like you did, but “the Meta comment” could have been confusing, even with the capitalized letter.)

> Markets aren't efficient.

Markets: eventually efficient

Every consensus is potentially wrong, which makes it an opportunity.

> I was repeatedly trying to convince HN readers

There's not much point. Invest how you see fit and let others figure things out the hard way.

I listened!!

You're not crowing about short-term stock gains, are you? Because that would be a terrible basis for financial advice.

I said months ago when they announced layoffs that Meta is fine. They are a literal cash volcano. Zucks foray into the metaverse to the tune of 10B/year is dumb, but it's a cash expense. Eventually he'll tone that investment down and that expense will flow right to the bottom line. Full disclosure, I am long Meta.

I bought a small amount of META when the narrative of its downfall hit its peak. It’s the first individual stock I’ve bought in 12 years. I’m now going to be up about 60%.

> I bought a small amount

This is why it's really hard to win big buying individual stocks. You finally pulled the trigger, and you won, but you never even had a chance to make more than a small gain.

Say you even bought $100k, which is probably much more than most mere mortals have the stomach to "place a bet" with. You'd be up 60k, which is great, but probably not life changing. And now you have to decide if you want to cash it out or let it ride and risk losing it.

On the other hand, it doesn't take much intestinal fortitude to park 100k in VTSAX and sleep well every night.

Obviously one way to hedge risk is to use smaller amounts. His gains on that portion are still greater than if it was parked 100% in VTSAX.

Only if you care about percentage gains more than dollar amounts.

Depending on how much meta he actually bought, he may have made more money today with the s&p's 0.22% gain that he's made with meta all time.

But meta probably feels like the big winner.

I don't see how that's the case. If he had 95% of portfolio in S&P and the FB he bought was 5%, he still did better in dollar terms than 100% S&P.

We can't know unless we know how much meta he bought and how much s&p he owns (if any).

But 5% is probably much more than anyone should allocate to a single stock.

And just to demonstrate my point, he could have bought 1 share of meta a couple months ago for $100. And he could have $1 million in his 401k.

And that 1 share still outperformed the equivalent amount of S&P.

Right, but my original point was that no normal person (including OP) dares to take such a risk with a single stock, so in real life there is no "equivalent amount of S&P" in the equation.

> But 5% is probably much more than anyone should allocate to a single stock.

With the exception of Apple?

> You'd be up 60k, which is great, but probably not life changing

I certainly hope that it wouldn't be, for the person who placed a $100k bet.

> This is why my best piece of financial advice is to tune out the media.

I'm trying very hard to not say 'I told them so'.

In fact, I said this before here [0] [1] [2] too many times to stop listening to the nonsense from the media. Meta has lots of cash to last for another decade and they are still printing money.

Such calls for the death of Meta Platforms on HN and in the media has once again always been greatly exaggerated.

[0] https://news.ycombinator.com/item?id=31832439

[1] https://news.ycombinator.com/item?id=33991718

[2] https://news.ycombinator.com/item?id=32256465

Buying back another $40 billion in stock also helps. The narrative around metaverse costs was largely that they should return cash to shareholders rather than dumping so much of it into that incinerator. It looks like the board took that advice.

> rather than dumping so much of it into that incinerator.

It's strange to me that people think Reality Labs is an incinerator. Truly, without exaggeration, I think this entire perception is based on the ridiculous early Horizon Worlds screenshots Mark Zuckerberg posted, which did a ton of damage to Meta.

But Horizon Worlds is not The Metaverse, and it's not Reality Labs! It's one part of it. Reality Labs has game studios, the leading VR/AR hardware, all kinds of software packages to make working in the Metaverse possible, like Horizon Workrooms, Horizon Remote Desktop, and quite a bit more. They are quickly developing a fairly insurmountable moat.

Meanwhile, Apple is also dumping billions into AR, but they don't break it out in earnings reports, so no one talks about it.

There are lots of execution risks in Meta's VR strategy. Obviously, if no one ever wants their products for games, work, entertainment, or whatever else, then they will have incinerated an awful lot of money. But I think that's actually the unlikely scenario.

The quarterly losses are very large, but it's an entirely new product line with a very large potential market.

To abuse the metaphor a bit, incinerators generate energy. It's entirely possible that Zuck and Co. have been capturing the energy produced by this one in order to help propel the company forward in the future.

> But I think that's actually the unlikely scenario.

Right, we take opposite sides of the probability here. My preference is just that they direct some of the output from that prodigious cash-generator towards shareholders in the meantime. You know, like Apple does.

Horizon Worlds is what Meta chose to showcase, so it’s pretty reasonable to draw the conclusion that it’s the best they can do right now.

The screenshots you’re talking about are of Zuckerberg trying to gin up enthusiasm for the product.

The insurmountable most is surrounding a space that doesn’t make any money. Apple may be investing in AR but they didn’t signal that they are betting the company on it

> it’s pretty reasonable to draw the conclusion that it’s the best they can do right now

It definitely isn't when you look at their research videos:

https://www.youtube.com/watch?v=4P3DMMwvCfY

People forget that stock buybacks also create a pool of equity for employee compensation, it isn't just about returning capital tax effectively

In fact, despite years of buybacks, Meta's outstanding shares have been mostly flat.

Historically their buyback has only compensated for employee equity comp, not much more. That probably changes a bit going forward

https://www.macrotrends.net/stocks/charts/META/meta-platform...

I'm trying to figure out if there's a tax advantage to anyone from an RSU + buyback scheme vs straight cash to employees. Seems like it'd be net 0?

I don't think it's about tax advantages but flexibility for the conpany. RSUs usually vest over several years. If times get tough you can slow/stop buybacks. Eventually that would have an effect on the price from dilution but it'd be slow. You can't just not pay out cash awards that have already been scheduled (unless you opt for layoffs, but that's a big hammer).

It's also about aligning employee incentives with company success

> In fact, despite years of buybacks, Meta's outstanding shares have been mostly flat.

They were mostly flat in 2018-2020. They were down 4% in 2021 and 5% in 2022.

Meta share count is only down 6% total since the start of the pandemic. And down ~10% total since their share count peak in 2017

Looks like you're referencing YoY rates as measured on a quarterly basis from the link above, which is not the same as the absolute percentage of shares.

Likely the pace will rise somewhat with recent job cuts/buybacks, but historically they've mostly just tread water with shares issued via software based comp

> And down ~10% total since their share count peak in 2017

That seems compatible with what I said (flat 2018-2020, down 4% in 2021 and 5% in 2022).

> Looks like you're referencing ...

https://s21.q4cdn.com/399680738/files/doc_financials/2020/ar...

  As of December 31, 2020, there were 2,406 million shares of Class A common stock and 443 million shares of Class B common stock issued and outstanding.

https://s21.q4cdn.com/399680738/files/doc_financials/annual_...

  As of December 31, 2021, there were 2,328 million shares of Class A common stock and 413 million shares of Class B common stock issued and outstanding.

2021: 2849 -> 2741

We don't have the end of year figures yet but from the Q3 report:

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001326801/d3f3edd...

  2,248,672,204 shares outstanding as of October 21, 2022 
  402,876,470 shares outstanding as of October 21, 2022

  Class A shares [...] 2,262 million [...] outstanding, as of September 30, 2022 
  Class B shares [...] 403 million [...] outstanding, as of September 30, 2022

and from yesterday's earnings release:

  Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders (Three Months Ended December 31, 2022): Basic 2,638

While we wait for the filing we can take a guess:

  Sep 30: 2665
  Oct 21: 2652
  Q4 average: 2638
  Dec 31: ~2615 ?

> As of December 31, 2022, there were 2,247 million shares of Class A common stock and 367 million shares of Class B common stock issued and outstanding.

2614. Not bad!

8.2% fewer outstanding shares than two years ago. If that’s “mostly flat” so be it.

Or price discovery in US markets is completely broken. Could also explain it.

Mumbles something about perpetual FTDs, naked shorting, the biggest market maker also being a hedge fund (who donates many millions to corrupt politcians), tokenized securities that can be used as short locates and so on...

What’s the biggest market maker?

If you have any long form versions of this ranty comment, I’d be genuinely interested in reading it. Cheers

Citadel securities (the largest retail market maker, this is the company front-running every single one of your trades through PFOF if you use a "free" broker like Robin Hood)

Citadel LLC (the hedge fund)

Both part of Citadel the mother ship. All owned by 1 man (who like Madoff owns a hedge fund and a market maker, but unlike Madoff actually seems to execute trades with his hedge fund).

1 man who also happens to be the top GOP donor (what could he possibly want in return?): https://www.cnbc.com/2022/10/07/citadels-ceo-ken-griffin-bec...

If you want more info, this is an OK start: https://youtu.be/26_IcexvePA

Kind of old, but still relevant (not much changed since then). The same documentary makers are working on a new one that I believe will come out this year. There's tons of info to find online if you Google any of those terms in my rant from the previous comment as well.

PS: those are just tips of multiple icebergs, there's more.

On a yearly basis they are still down about 4% in revenue from advertising and apps and down 17% in the reality labs section. Their business is just shrinking less quickly than investors feared.

in constant currency they would be up about 4%. the biggest trend is revenue per ad was nearly offset by growth in number of ads - the latter is likely to hit its limit sooner than the former and that seems like the biggest risk to the business

What does AH stand for? Thanks.

After hours , as in stock movement after the market has closed for the day.

After hours. Wall street is closed basically.

My only concern is that cost per ad was down 22% this quarter. They counteracted by showing 17% more ads on minimal user growth which seems likely to accelerate Facebook exodus.

> If the media is talking about how Facebook peaked or is the next myspace, this is time to buy

Yeah same for FTX /s

Better to just not see what the media is saying period than go full contrarian

In FTX case it had already happened when the media reported. In fact, prior to the scandal most of the media about FTX was positive.

Then why fire so many people?

> Same for Netflix.

I followed as NFLX dropped, and it was definitely a media narrative before the drop was over. We don't know where things will shake out, of course, but it's not the case that everything is priced in by the time the media starts talking about it.

Seems like anti-tracking by Apple had a tangible impact on their business -- revenue down from last year.

Yeah it’s huge. Lots of small niche businesses in our area lost their route for finding new customers (General advertising too expensive for their market demo.).

Yikes. Good lesson learned for them there I hope.

The philosophical lesson is that certain businesses just can’t exist without targeted advertisements, and that society might decide that is a price they are willing to pay.

This feels like a cheap take. Consider any number of small businesses just starting out (a local juice bar, a fitness service, a mobile app, a game...). They have a good product that makes their customers happy. The problem is they only have 5 customers and that won't pay the bills. They could hope that they just get lucky and people just discover them (it happens but its rare), or they can go out and promote their product. So they invest in marketing and sometimes this means buying ads. Can this business exist without targeted ads? Of course it can, but the odds are stacked against them. Saying they can't exist is an exaggeration.

If it’s not targeted but only 1/10000 people would be interested, general advertising could be too expensive.

For local businesses, direct mail, signage, and door to door is still totally an option.

Not if you cnc manufacture obscure custom bike mods or the like.

I'm sorry but personal privacy trumps someone's business.

People may hate apple but we're continuing down an advertising hellscape. I feel bad for the small business owners. But that's life.

I really don't understand this. Like, Facebook and Google don't have teams sitting down examining each user to assess what ads they like.

They just shove vast amounts of data into towers of ML models and a prediction comes out. They use that prediction to rank ads.

In this scenario, how was your privacy violated?

This isn't a troll, I'm genuinely interested in your answer.

The lesson: "Always pay tribute to the bigger company"

The lesson is you want to own the platform. Because then you get to brand the META/GOOG ad opt-in "tracking" and yours "enhanced digital experience".

What do you think the lesson is?

That they should go directly to Apple for targeted advertising when iAd 2.0 launches.

Except that Apple has no plans to compete with Facebook or Google.

It is just first-party advertising for App Store, News+ etc.

The sort of channels small businesses were never going to use anyway.

> just first-party advertising for App Store, News+

And stocks and weather. They also have a video platform they could expand into, and music oh don't forget books. Don't they also make a web browser?

Hmmm.... Yeah, i guess it's no big deal that it's only apple's first party apps.

They are all first party and combined represent ~0% of the advertising market share compared to Meta and Google.

Apple is irrelevant and until one of those channels gets billions of users looking at it every day it will remain irrelevant.

of all the brands, apple cult brand is the strongest, it's hard to argue when it's already spelled out word per word in their leak internal memos that their intention to stop tracking was because they wanted a cut of FB's ad revenue.

Their execution under the guise of caring for user privacy is a master class though, it's impeccably done, there should be a case study done about this.

Yeah, great lesson that unless you are a billionaire who is ready to spend millions on superbowl ads, you have no business starting a new brand.

How about, unless you can pay someone to spy on prospective customers, you have no business starting a new brand?

I’m not sure where that tangent came from but that certainly wouldn’t be the lesson learned.

The lesson learned is that these small “brands” that can only exist due to adware (fake demand) will eventually be culled by increases in prices or de-amplification of their products.

If your “brand” is one of these then you should be learning that you need to actually make a good product at a good price that doesn’t rely on advertising to succeed in your marketplace. Otherwise you are always at risk of being squeezed and potentially shut down.

Many (certainly not all) of these companies are parasites in that the rely on Meta to utilize algorithms to get you addicted and alter your purchasing habits. They don’t actually offer a good product at a good price, they offer copies of other products with different labels, or in some cases outright, disposable junk.

> you need to actually make a good product at a good price that doesn’t rely on advertising to succeed in your marketplace.

How do you create a product that doesn’t need advertising? People need to find out about it somehow.

Get creative I guess

Too risky unless you are rich.

not sure if you are being serious or sarcastic, but ads are pretty much essential, especially in this extremely competitive attention span of a market

I'm being serious. The competitive nature that you mention proves the point. Don't compete.

Are you a local coffee shop or clothing designer? Why would you be advertising on Facebook when you should be partnering with a local news site or city/town interest site, or going to meetups, or sponsoring local events?

Relying on Facebook ads builds artificial demand, subjects you to extreme competition, and ultimately either you have to spend too much to maintain or you eventually lose customers because the only reason they were interested in your product was the ads in the first place. Live by the ad, die by the ad.

> you should be partnering with a local news site or city/town interest site, or going to meetups, or sponsoring local events?

All of that is advertising.

I was replying to this:

> If your “brand” is one of these then you should be learning that you need to actually make a good product at a good price that doesn’t rely on advertising to succeed in your marketplace.

Maybe I misinterpreted the meaning.

Yea I was talking about advertising via Facebook and social media but obviosuly see how that could be misread. cheers

Millions of small businesses started just fine before Facebook existed.

Niche and local Business didn't exists before facebook?

They did, but the explosion of very specific businesses is almost entirely down to Google and Facebook changing the cost structure for these businesses by providing global advertising reach for companies that are small but have products that can be purchased anywhere.

Sounds like it works then! Glad I always press "Ask App Not to Track"

objectively this means you still get ads just less releavnt ones, no? It's not like the button says "Don't show me ads."

> objectively this means you still get ads just less releavnt ones, no?

business might choose to not show ads at all vs showing irrlevent ads. Surely there is a downside and risk to showing ads, a risk that cannot be taken willy nilly.

Less targeted ads are less likely to psychologically manipulate me in to spending money. I'd like an option to only show me ads I have no chance of spending money for.

Less relevant are better if you do not like ads. It is bit easier to filter them out of the mind.

I hate ads. Used AdBlocker since ~2005 when I was in middle school and first got internet. If I'm going to see ads, they better be relevant.

The main effect of that button is blocking the measurement of whether your ad click turned into a purchase, which is important because pricing ads based on conversions is more efficient than charging for impressions or clicks.

“Relevant” ads are sort of a red herring. Ad personalization matters, but commercially it’s less important than conversion measurement. Notably, Apple asks for permission before showing personalized ads, but never asks for permission to track conversions (while blocking competitors from tracking conversions by default).

Exactly - they are way easier to ignore!

It speaks to how good targeted adtech is. When I don't give them unlimited access to my metadata, the ad quality plummets. They really can give you "good" ads if you let them. But now they have to waste money on untargeted ads for me lmao.

Let's see if Apple's own ad program will step into that void it created.

Funny how that works. How is Apple's ad platform doing these days? Does anyone know?

Weird, isn't it. Apparently it's growing significantly (it'll be interesting to see what they say on their earnings calls).

* Meta runs an ad platform for their channels e.g. Instagram, Facebook.

* Apple runs an ad platform for their channels e.g. News+, App Store.

Each platform is tuned for the requirements, datasets etc unique to their own channels and you can't just drop one platform in another company.

Revenue increased (very slightly) on a constant currency basis

Cost per ad down 22% this quarter. Hard to say how much is the apple change versus other headwinds, but it definitely seems significant.

This is why I don’t understand people who are criticizing the pivot. Why focus on revenue that won’t be there if you don’t have your own dedicated hardware platform?

Yes, XR as a whole has a long way to go still, but it’s obvious that it’s the future

Net income down ~40% YoY ouch. Stock is up though!

what's the main reason for this?

$40B increase to their buyback program.

Edit: Actually meant announcement of an increase to buyback program, not that they've already done it.

what would the number look like if it weren't for this?

Hard to predict and I’m not sure of the timeline of purchases, but 40B was 10% of their market cap at closing, which is kinda bonkers. So naively at least a 10% jump.

I don’t think that’s correct. They announced a future increase of $40 billion. And I don’t think share repurchases affects net income anyway.

Stock buybacks aren’t on the Income Statement…

Hrm, no. The $40bn they announced is forward-looking guidance for 2023. In 2022 they repurchased $28bn (2021 they repurchased $44bn) [1].

Not sure that I'd call this "admitting defeat on growth" as other people have said elsewhere in this thread, given that they've done buybacks of this magnitude before.

The main issue, it seems, is that they grew expenditures on cost of revenue and R&D (i.e. operations and capex), but revenue (advertising from family of apps, whatever revenue VR yields) did not keep pace -- in fact, it was flat on a YoY basis [2].

IMO, this doc is strong evidence that the layoffs were a bona fide good idea. Will be interesting to compare to Alphabet's tomorrow.

[1]: see the cash flow statement on page 8, the search term is "Repurchase" https://s21.q4cdn.com/399680738/files/doc_financials/2022/q4...

[2]: revenue and income figures are broken out on page 10. costs of revenue/r&d figures on page 6.

That cash hasn't come out of the corporate treasury yet:)

Costs went up a lot, primarily from increased payroll. That's why they did a big layoff, although I believe they still have more employees than end of 2021 even after that.

Yea, I think the point-in-time, annualized R&D expense on 2023/03 will be the midpoint of the reported figure for 2022 and 20221. (~$30bn, where EOY 2022 was $35bn and EOY 2021 was $24.6bn).

The layoff, we can imagine, impacted maybe 15% of R&D at most.

It might still be too high in 2023, depending on what their revenue figures do in Q1/Q2. Would be interesting if they needed to do another layoff -- doesn't seem outside the realm of possibility.

As someone who was laid off, this is because while the announcement was in November, the WARN period meant we were all on the payroll until into 2023.

kind of interesting

covid happened, money was printed to replace lost wages but somehow it trickled up

plus people couldn't leave their house so tech companies saw booms in sales/revenue

so then inflation happened to the tune of 8% and the narrative was "if you didn't get at least an 8% raise 2019 -> 2020 -> 2021 each year you basically got a paycut"

and now we're seeing layoffs that basically feel like a reaction/counterbalance to any inflation rasies (or hires) that were given/made

"if a tree falls in the woods and nobody is around to hear it"

"if you get an inflation-sized big raise but then get laid off, did you really get a raise at all?"

Probably a huge short squeeze.

Question for folks here: what is the bull case for Meta remaining a growth stock, given the current regulatory environment and uncertainty around the medium-term prospects of VR as an "attention" category?

More concretely, what is the scenario for META going back to "good ol' days of" mid-20%, low-30% YoY quarterly revenue growth, given mounting regulatory and privacy barriers that are largely beyond their ability to exert influence/control?

Context is they're on a streak of 4 quarters of <10% YoY quarterly growth for the first time in their history. Last three quarters were basically air-balls (flat / slightly-negative).

You know Meta has the best tech in terms of AI/ML right? They just need a new leadership focus to steer the company in the right direction. They literally have all the tools to lead in that area.

Do they? The LLM they released was much worse than GPT-3.

All those models are only as good as the data they’re trained on. Google and Meta both have the most relevant proprietary data that cannot be rivaled. Not even close.

This depends on what are you training the model for. Arguably wikipedia is a much better dataset for all things related to real world and history than Fb’s feed or activities or a bunch of websites optimized for SEO.

This is easily illustrated by ChatGPT not being Google or Meta and doing a pretty great job with available sources.

So no, this doesn’t matter much, imo.

As an encyclopedia sure wikipedia is great but the type of data Google and Meta has is totally different. Basically a real time feed of who is talking to who about what, and what people are searching for. Totally different applications

That’s incredibly naive. ChatGPT is not the state of the art. Not even close.

> All those models are only as good as the data they’re trained on.

Having seen the average level of discourse on Facebook, I have no reason to believe that it contains any proprietary data worth training on.

I guess you could train the ultimate toxic shitposter and then do the opposite of what it says

It's largely worse from the outside because meta has no goodwill to make mistakes and iterate in public. GPT-2/3 were just as bad at hallucination, if not worse. That doesn't mean that meta isn't iterating on their LLM in private using the 3b users and armies of labelers to fine-tune and improve their model.

From what I understand, they have one of the strongest translation models at scale, and their recommendation models for advertising are likely only rivaled by Google or Bytedance

How does this concretely translate into a marginal $30bn/year in revenue?

Inverting the question, who would collectively pay $30bn/year to buy "AI/ML from Meta", assuming you're talking about a new product offering.

There are only two platforms where AI/ML will be delivered.

Cloud for the Enterprise

and

Mixed Reality for People.

Mixed Reality is the final platform that kills all other platforms and has a potential greater than $40 Trillion

“ There are only two platforms where AI/ML will be delivered”

Why would you believe these are the only platforms?

In a broad investment sense. Sure there will be other niches.

But just like Mobile phones and Servers were the twin tech platforms till 2020 that delivers all of digital value. That paradigm will shift to MR and Cloud.

If we are all going to live in a Metaverse, you need a MR device to deliver that experience to the user and Cloud to centralize/distribute those experiences.

Besides food (and physical healthcare) and a climate-controlled 20 x 20 space, you don't need the real world (atoms). All your experiences will be delivered through bits.

Normally acquiring smaller companies would be the answer but that is no longer possible, it would seem.

They also couldn't diverge into finance.

Honestly, by this point, it could be that the stock is hit too hard, but I fail to see a long term bull case as things are today.

They're currently priced at 3.5x annualized revenue. If you assume they could capture 20% of that revenue consistently, that's 20x annualized profits (equivalent to 13ish years of profit on this basis).

To me, this seems close to the max price I'd value Meta, given the headwinds to growth they face.

The inability to grow via acquisition seems like a big hurdle -- that's what I was hinting at with "regulatory pressure".

To me, I think the bull case is that they come out with an Apple-tier-quality headset, thereby begetting and capturing the mainstream headset market from a data privacy point of view, and that this new market is additive or multiplicative to their core ads business, rather than cannibalizing (an idea that is, itself, suspect).

IDK. If I bought at $90 (which I didn't, somewhat foolishly in hindsight), I'd feel pretty comfortable selling at the current after-market price.

Oh definitely, we are not disagreeing.

I have two rules personally - don't invest in highly speculative assets, don't invest short term.

So I am out of $META in general, as it fails the test on both prongs for me. It is highly volatile at the moment, and if I think 10 years into the future, the only reason I can think of for them being around is "network effects". Compared to something like $NVDA, that is just a weak argument in my opinion.

Yes! Sorry didn't mean to sound like I was disagreeing, I was more just riffing on what you said. More riffing below :)

I think $META will continue to win the "social network" game on any computing platform into the foreseeable future, as that's their "unreasonable" competency. i.e. Even if Apple wins the VR hardware game, Meta has an unfair advantage at developing the most popular social media app on that platform.

However, I struggle to see a narrative where the capturable value of that social media landscape increases at growth stock rates into the distant future, given the fact that any VR winner other than Meta is liable to create a more-private-by-default computing platform than previous platforms of computing (this seems to be a secular trend).

So, even if Meta controls the same percentage of the "social media advertising" market into the transition to VR, I could see this being a smaller TAM than "social media advertising" is at (now-peak) web 2.0.

That is, it seems like their only hope to remain a growth stock to become the "Apple of VR", which seems to be squarely outside their circle of competency.

All in all, I'd agree with you and put META in the "too hard" / "probably not" category at current price. Although, even with these uncertainties, $90 was a no-brainer in retrospect (even assuming permanently-flat revenue). With perfect hindsight, I would have bought then and probably sold at $120, although that's all hot air (X

I think the question of "what is the value of non-targeted ads / contextual ads", "what is the risk of an aging population", "how to price tiktok risk" are all also a part of it.

The issue I have with them is that social media is quite a shaky thing on the long run - every generation is pretty much resetting the whole game, so to speak (i.e. your network effects might matter for existing groups but not for the new ones).

This, combined with economic uncertainty, makes me think "if the stock tanks for a relatively long period of time, what is the inherent value that gives me trust that they will recover?"

I think even for pure software companies, META is quite susceptible to disruption in this regard.

Not to mention, if Zuck decided to double down on his doubling down, he could have. Then we would have seen even lower numbers than 90. Since unlike other companies, META lacks checks and balances, that is also another point to be worried about, if you want to invest for long term.

They just won in court like two days ago against the FTC to go forward with Within's acquisition.

I'm more talking about the fact that, if there were a new Instagram or WhatsApp for VR that threatened their social media hegemony, Meta would most certainly be blocked from acquiring it. Especially because it seems the current FTC regrets that previous FTC administrations green-lit the WhatsApp and Instagram acquisitions.

The Within case isn't informative, IMO -- Within wasn't building social media applications. It was more a case of an acquihire. The VR ecosystem is too early to have an Instagram/WhatsApp moment, yet.

Fair, I agree they probably couldn't buy something like Clubhouse.

I brought up Within because it was talked about a lot on fin-Twit as proof/sign they can't M&A anymore.

Why does it need to be a growth stock? It’s still pretty cheap even for a value stock.

I think the current after-market price ($180ish) pushes it out of the "value" category, at least for me (there's no hard science on this).

To me, $180ish prices-in some growth that I'm personally skeptical towards, hence my question! :)

Disagree. If they are able to cut costs a bit more $180 is a perfectly reasonable value price for metas revenue.

Metaverse is a $20 Trillion market by 2035.

Only Apple and Meta are the true players who are all in. Even if Apple captures some high-end market, Meta has the opportunity to sweep the rest

That's a ridiculous forecast.

Modern investing isn't about evaluating a company's products or services, it's about making increasingly-outrageous claims in order to take advantage of the human tendency to fail to exercise skepticism for sufficently-outrageous lies. The goal is to create a fanatical religion of financial death-cultists who will endlessly proselytize in the pursuit of a promised "to the moon" event, in the same way that Heaven's Gate believed that UFOs would swoop down and take them to heaven.

So, indeed, by 2035 we can accurately predict that half of all global GDP will be in Facebook, half will be in Tesla, the other half will be tied up in Bitcoin, and the rest of the world economy (who probably aren't doing anything important anyway) will fight over the fourth half.

World GDP by 2035 is $200 Trillion

People conservatively will live in a Metaverse an average of 4 hours or 25% of their waking day or $50 Trillion of it.

Even if you are conservative, Metaverse is a $30 Trillion opportunity.

Ignore at your own peril

… Why would they do that, tho?

Like, the real world exists, just outside the door. I think VR advocates possibly are inclined to overestimate just how much people will like VR. It seems fairly plausible that it remains a niche hobby.

Yep, you sound like the same person who dismissed internet at 9600 baud because you lack the imagination of what the internet would look like at 1Gbps

25% of time != 25% of economic value.

There's 122 waking hours in a week, so by way of example: the USA's workforce of 155 million (much smaller than the population as a whole) does an average of 35 hours per week, which means the entire productive output of the economy is squeezed into 12.9% of the entire population's waking hours.

Some of the non-productive time involves other people getting paid, but (excluding taxes and rent which I don't think make a difference in this scenario) not all of it.

Also think about how Linux and Wikipedia are free even if your internet connection and device(s) aren't.

The only thing you need the outside world is food (including healthcare) and a climate controlled 20 x 20 room with plumbing.

everything else can and will be simulated.

It’s obviously going to be $21T

Do you think Metaverse ad revenue will not cannibalize social media revenue, as people shift their attention from one to the other?

Or that Metaverse attention will somehow be 100x as valuable as social media attention (current global social media revenue is $200ishbn)?

Bingo!

At the end of the day, attention is all that matters and the most valuable commodity.

Current social media captures only 10% of all human experiences that are possible in the Metaverse. We haven't even fully tapped 7 Billion people's productivity and wealth (even in the current mobile world). So, the potential is 200b * 1000 in about 13 years

but where does the 500x come from? 2x for population....and then you assume that social media is 10% of the world experience....not by reckoning. they capture....a pittance of the experience. they are like wakes in the wave....the wave is the experience, the wake is social media. Due to attention issues and limits on multitasking...how much can we honestly expand...c'mon. 10x sure....maybe even 20x....so a 4T market?

Don't forget World GDP is also expanding.

Don't forget productivity of the Rest of the World will catch up with US (and making each attention second more valuable to the advertisers)

Don't forget most activities will go to Metaverse.

Finally, get out of Mobile-Phones-will-capture-all-long-distance-calls-revenue framework

> Metaverse is a $20 Trillion market by 2035.

That's about the current US GDP.

World GDP by 2035 is $200 Trillion

People will spend at least 4 hours or 25% of their waking hours in Metaverse (It'll be more, but I'm being conservative), at least $20 Trillion of human activity will occur in Metaverse (because bits are cheaper than atoms)

Well that is a thesis. I disagree with most of your thesis, though world gdp at $200T i do agree with.

But I appreciate you trying to lay it out, i'd say metaverse spending will be less than 2% at that time. Most of the world wont' even be near the meta verse in 10 years.

This is absolutely coming from a privileged view.

Rich people who can take vacations, go to concerts, eat at restaurants, hang out with friends, afford to play golf, tennis and a decent home of course want to live in the real world.

There are 7 Billion other people who would love to have that same experience even if it's virtual for the same price as a mobile phone.

I don’t think your view is all that privileged. I just simply disagree that poor people will spend money in any meaningful way in the meta verse.

I mean think this through, you can’t even pay for the basics of life like food and shelter, and you’re going to dump 25% of your spending on the meta verse?

I mean, I’m guessing you don’t yet have a family as once you do you’ll realize you’ll spend most of your money providing for them and not on virtual fun.

Poor will have the highest utility in the Metaverse, just like the internet.

But far away the least amount of money to spend. Surely you can see that?

it throws off your entire thesis. If in your dystopian future, after the necessities of life are taken care of and yo have no money how will any percent of GDP be spent in the metaverse

A few long term bull arguments:

- They have the worlds largest messaging platform (WhatsApp) that is basically unmonetized rn.

- They are one of 3-5 major players in AI. Amazon was one of the 3-5 largest internet companies... and then created AWS. (e.g., they released-then-unreleased a GPT3 clone before ChatGPT, because they got slammed in the press for ethics. doesn't mean they can't build a B2B business with it.)

- The regulatory landscape is shifting towards tech nationalism. Yea, there'll be regulation, but nationalism will limit the scope + create a moat against upstarts.

Recessions are great times to build new businesses - if you have cash on hand. They have cash.

It's not clear it's even possible to effectively monetize pure messaging platforms like WhatsApp - there aren't many successful examples of highly monetized chat apps. Chat is pretty much the hardest thing in all of social networking to monetize and there is no guarantee Facebook can effectively monetize WhatsApp without sabotaging its primary purpose (communication). IMO there is a reason WhatsApp is still basically unmonetized right now.

How does Facebook stand to monetize from AI? AWS and Google monetize through their cloud offerings, but Facebook went the library/framework route with PyTorch. That seems like a big question mark if they can capitalize on AI in some form outside of their own internal systems (like ad optimization and general monetization/product improvements, which everyone is doing at the same time).

They have a ton of cash, but can they effectively use it? They are burning a lot of it on VR which isn't catching on the way they envisioned. Facebook is at a point where they are already huge so to maintain 'growth stock' valuations they have to keep delivering quarter over quarter results that move the needle in the billions and billions of dollars. I don't see a compelling case for them to do that based on these pillars.

> It's not clear it's even possible to effectively monetize pure messaging platforms like WhatsApp

Well, WhatsApp is moving beyond "pure" messaging with payments and commerce (Eg: JioMart integration in India).

Another approach would be to compare with wechat with 1.2 billion active users generating an estimated 15+ Billion in revenue in 2021 (https://www.businessofapps.com/data/wechat-statistics/) without much North America / EU presence and being banned in India.

Thirdly, click to message ads are already a "multi-billion dollar" business with "strong double digit growth" as of 2022 (https://www.cnbc.com/2022/08/07/why-meta-and-mark-zuckerberg...)

I don't know if we can draw much from the comparison to WeChat.

WeChat is effectively an operating system for the domestic Chinese economy within a single app, it's 10-100x more complex than a messaging app, and it enjoys official blessing that WhatsApp would never obtain in any market. You can hardly survive in China without WeChat, it's so tightly integrated into everyday life.

They could monetize AI by using it to boost their own properties.

For instance they could replace human content moderators, which is costing them billions. Maybe offer some "Meta premium" which summarizes and lets you ask questions about your WhatsApp, messenger chats. Perhaps improve ad targeting by understanding user post content better?

I still believe long term that XR will replace or augment our smart phones. Apple will make it socially acceptable and meta will capitalize on selling it to the mid to low end of the market.

Almost 3 billion monthly active users and youngsters like their VR.

My personal bet is that the tech giants are immune from US regulation. Hurting a tech giant just means that that market position goes to Asia, most likely China.

At current price, Facebook doesn't have to remain a growth stock. It's trading at a 15 P/E multiple. For comparison Proctor and Gamble is trading at a 25 P/E, Coca Cola at 26 P/E, and Comcast at 33 P/E. For Facebook to go up (at least relative to prevailing American equity valuations), it just has to remain a blue chip marquee name and not go into terminal decline.

No one seems to be talking about thr $40B stock buyback authorization just announced. I'm neither a fan nor a detractor of META, but think with eps growth so negative and such high losses, perhaps stock price increases are partially due to the promise of buybacks from an elastic market.

It's an absolutely great idea if they can get to real eps growth over the next 3 or 6 months. I would flip bearish if they can't get to positive eps growth in 6 months.

I don't have any META in my portfolio, just making an observation.

Meta has always been immensely profitable. It was hit this year because investors didn’t like how hard mark was going into the reality labs stuff and that also reminded them that he can do whatever the hell he wants, including making no money for extended periods of time. Their recent layoffs and this reports continued capex cuts show that mark is committed to keeping his investors happy which is why we’re seeing the bounce back.

How do they make all this money when everyone I know has stopped using it?

Other countries?

You don't know anyone on Instagram? That seems very unlikely. And yes, the United States only supplies a quarter of a billion of Facebook's/Instagram's three billion users.

you are not the average american

Because you don’t know everyone.

Instagram is an app and therefore can't have its ads (easily) blocked. Facebook is mostly used by older people that don't know about ad blockers.

Facebook is an app too

And almost all of the revenue for it comes from mobile users.

Is this why Reddit pushes people to its app?

Yes but also tracking.

What kind of tracking can be done in apps that can't be done in browsers?

If you ever download or upload a picture in the app, you’ve likely granted full access to your photo library, which includes location information on every photo along with timestamps.

Also just direct location access, even when it’s running in the background.

What orientation the phone is in (are you laying in bed?) and is it moving?

Then of course more specific metrics within the platform around how long you looked at a post, how fast do you scroll here, how much do you read certain comments compared to others, etc. Those platform metrics are a lot easier to track when you have full hardware access instead of just the apis that mobile javascript provides

Does the app also get to see all the photos in the photo library or just metadata?

Always remember that the US is like 4% of the world population.

Their profit margin on international users is way, way lower than US and Canada.

That will change as the world gains parity.

You realize that this is the bullish take?

They deliver more ads today than they have at any point in their history. That's a function of active users, and of their UX. The instagram/fb experience of today is not anything like it was 5 years ago -- there are a lot more ads.

At the same time, more people are "using" their family of apps in one way or another on a daily or monthly basis. These metrics entail all kinds of flaws, but ads delivered and ad impressions are the metric that explain the phenomenon you describe, more than net-new users.

That being said, yes, international expansion is a big deal for how they grow the "user" count metrics.

What I've come to realize is that everyone likes to say they stopped using it, but the reality is that they actually do still use FB. They just aren't as active posting their own updates. But they are engaging in the platform, comments, etc. FBs got a long way to go before the golden goose is actually at risk.

Younger people not using FB though seems pretty real.

> What I've come to realize is that everyone likes to say they stopped using it, but the reality is that they actually do still use FB. They just aren't as active posting their own updates.

You could be right, but I think it’s more so that our specific circles may actually have stopped using it while most folks, in general, remain users.

> Younger people not using FB though seems pretty real.

We've already gone through one cycle of "young people are abandoning Facebook" with millenials and Snapchat. And it turned out that the thesis of Snapchat as FB killer was widely overblown. Snapchat failed to really expand into other demos the way early Facebook did, not to mention a lot of those Millenials aged out of it and migrated to Instagram.

Now we're hearing the same story but with Gen Z and TikTok. But it's hard to see a compelling reason why TikTok will wind up a different story. Seems very unlikely that my kids pre-school will eventually wind up uploading to TikTok the way they do Facebook.

My guess is the youth vanguard will always use whatever the new hotness is in alternative social media platform, because keeping grownups out is the point. But Facebook (and Instagram) seem like they're firmly entrenched as the base layer of civil society.

They showed 17% more ads this quarter than last years 4Q. Reports of facebooks death are greatly exaggerated.

They showed approximately the same number of users an increased number of ads, and those ads were worth approximately the same amount less.

Tells me they are locked in a spiral of an increasingly awful user experience.

You'll note that revenue from advertising fell 1%

A lot of people may have stopped using Facebook.

But what about Instagram? WhatsApp? Oculus?

I'm seeing far more ads on instagram reels.

What is it, exactly, that makes you think that "everyone you know" is in any way representative of the general population?

The death of Meta Platforms Inc. (Formerly Facebook Inc) has once again been greatly exaggerated.

Perhaps you should have bought the stock when it went below $90 rather than screaming about the price going to zero.

How things change in just several months. I have always expected the same: Business as usual [0]

[0] https://news.ycombinator.com/item?id=32256465

Seemed obvious to lots of people who live in reality.

There's definitely a weird echo chamber on HN that decries FB along the lines of "Oh no one I know uses it, therefore why does it exist", meanwhile 2bil+ people are using FB apps every day.

Always makes me laugh when I see those ridiculous statements - there's even one in the comments here!

Users of one social network complaining about another social network.

Meta's Dreams Have Become A Metaverse Nightmare

https://analyticsindiamag.com/metas-dreams-have-become-a-met...

Should have loaded those shares a couple of months back, smh. Up 70%+ since Nov last year.

I’m just really happy how resilient the economy is at this point.

Does this mean the tech layoffs will stop now?

I don't think so. I think this might be just another signal to other profitable companies that tightening your belt (even though you are making absurd money) is rewarded. Tight focus by Meta and better than expected performance of increased ad load has paid off.

+20% after hours, wow

Wow is right. This feels kind of ... speculative.

The crash seemed speculative to me. This feels like a return to normal honestly.

Its back on. Buy Tech! Crypto! Remember those Monkey NFTs? Buy Buy Buy!!!!!

After hours trading is often a mirage.

Not this time. +23% the following day

Numbers:

- Q4 add revenue of $31B Est of $30B

- $40B share bye back, far better than spending on the meta verse and an admission growth is over

- note to above, check out their existing cash on hand

- VR lost $4.2B, come on guys on revenue of $700M, again, come on guys get someone who knows what they are doing running this area

- 86,500 employees, I'm guessing alot of these are in recruitment, content moderation, etc

- laid off/fired 13% of workforce so far this running year

- daily users of more than 2B, wow, growth of 5% yoy, that is good

- shares up 15% probably alot to do with the Fed and tax loss selling holding period being over, so people putting this trade back on

- Total restructuring charges recorded under our FoA segment were $3.76 billion and RL segment were $440 million during the fourth quarter of 202 (FOA is family of applications and RL is reality lab). not sure what those charges are for, look into this.

- on adds, from Bloomberg reporting "Ad impressions increased by 18% while average price per ad decreased by 16% for 2022."

- So the add number they can game went up and the one affected by market force went down.

Thoughts:

- attempting to come back form Q2 and Q3 yoy decrease in revenue

- watch ad revenue, snap was down on large ad revenue declines. FB should be the same given they are in the same ad markets

- how often is tiktok mentioned by FB, or will they continue to pretend they have no competitors?

- Fed announced a small rate hike that the market loved so FB could rip if they perform even moderately well

- as always check out what shares of SNAP, Pinterest and GOOG do on Meta results, especially if add revenue is up, well maybe not SNAP as the market has given up on that company, GOOG and PINS are up, heck so is SNAP

- one other thing to watch closely is what Susan Li, the CFO says in the call, like what google did with Ruth Porat, they hired a numbers person to be the "adult" in the room to cut costs where possible.

Will the CFO talk about cutting costs or growign the company.

* note* I guess a huge $40B buy back indicates that FB's growth is over and Mark is capitulating to wall street here by handign back cash, rather than burning it on VR

> - 86,500 employees, I'm guessing alot of these are in recruitment, content moderation, etc

Headcount was 86,482 as of December 31, 2022, an increase of 20% year-over-year. Our reported headcount includes a substantial majority of the approximately 11,000 employees impacted by the layoff we announced in November 2022, who will no longer be reflected in our headcount by the end of the first quarter of 2023.

> - laid off/fired 13% of workforce so far this running year

I wish it was acceptable/normal for companies to reveal how much more of their workforce (if any) they plan to layoff in the coming quarters

It's almost as if there's a need for headcount projections.

> daily users of more than 2B, wow, growth of 5% yoy, that is good

eh, i always feel like this is dishonest for them. if a daily user is on whatsapp and they never see an ad, isn't that user just an expense for them? instagram users scrolling ads: revenue. facebook user scrolling ads: revenue. me talking to my family on whatsapp? unless they're benefiting from scanning the chat and delivering me ads on it (is this what they do? is it legal?) isn't it kind of like... they're paying the bandwidth/storage costs and getting very little out of it?

> on adds, from Bloomberg reporting "Ad impressions increased by 18% while average price per ad decreased by 16% for 2022."

is this left over from "apple's privacy changes made our ad targeting less effective so we need to display more, lower quality ads that are worth less to get as many conversions as we used to previouly"?

2B is the daily active users for Facebook specifically.

For the entire family of apps it’s 2.96 billion DAU (i.e. people who used one or several of FB/Insta/WhatsApp during the day).

would you agree with the statement that a WhatsApp user is most likely the least profitable compared to FB/Insta or do you think that statement is missing some kind of information?

I believe they’ve talked about this on earnings before, as an area with very significant potential for increasing monetization.

The whole lure with Whatsapp was that it was cheaper than sms. And now sms cost nothing extra.

You were talking about WhatsApp in context of the 2 billion number which doesn’t include WhatsApp users.

Is that including WhatsApp Business accounts (revenue positive) and the so-far limited roll out of WhatsApp payments in Brazil and India (revenue positive)?

Wow so with the 10 billion total loss on VR last earnings, are they now up to 14 billion spent on VR and metaverse? That's unbelievable for how little there is to show of it.

> That's unbelievable for how little there is to show of it

They multiplied the size of the market by an order of magnitude and they dominate the entire VR industry now?

Is it really a market when you created it by burning $6 for every dollar you make?

Unless you have a way to separate out what is attributable to forward investment vs current operating expense / revenue I don't think you can tell. Zuckerberg himself has painted a 10 year timeline on the investments they are making now.

To take it to a silly extreme, Apple has probably burned $14bn and hasn't released anything yet. So they have burned $infinity for every dollar they made. Does it make it a failure?

This is a good point, but I don’t think it’s as strong an indicator as, say, Uber selling rides below cost. I have a Quest headset which I now play a single game on, and I don’t generally game. I’ve shown an interest in the overall market.

It’s not as though it’s an obvious deal for me to use, like ride sharing or food deliver.

I would love to know where this money is going. $700M isn't bad revenue at all, that's probably more than all VR competitors combined and certainly enough to run the division off of. They canceled all the really promising/expensive R&D efforts like their own SoC and their own OS, so they're once more dependent on Android (eh) and Qualcomm (nooo). They haven't launched any major software and the hardware has stayed the same except for the massively underwhelming Quest Pro, which they're having to sell for $400 off right now.

Either the Quest 3 reveal is going to be stunning or bureaucratic bloat has grown to the point it's sinking the division.

When you say they haven't launched any major software do you just mean they haven't launched a killer app? The platform has had lots of incremental updates and continues to.

They haven't launched much of anything - incremental updates are well and good, but the Quest Pro software page is unchanged from when it launched. The top selling software page is the same stuff it's been for years, largely the same as the Steam VR page since the launch of the Vive. Their biggest software release in 2022 was "Among Us VR." Richie's Plank Experience, an app from 2017 where you walk on a board, is still in the top sellers. To me these are not signs of a healthy ecosystem.

VR experiences continue to have accessibility issues that make them seem more like the next 3D TVs than the next iPhone. But who knows.

What do you mean by accessibility? Content aside, I'd say the number 1 problem is friction. The headsets are still too heavy, too buggy, too isolating, too ugly for mass adoption, even though all those things have improved a lot since the beginning. The potential is so high I can't see them entirely vanishing like 3d TVs-I maintain that AR glasses the size and shape of Ray-Bans would be a 100 billion dollar industry. But it might take another VR winter to get there.

A nontrivial amount of people get violently ill when using VR. That's a heck of a lot of friction to overcome.

I don't think it's enough to matter. At least, I've demoed to a lot of people and never encountered one. I've seen artificial motion cause often, but never just using VR.

>When you say they haven't launched any major software do you just mean they haven't launched a killer app? The platform has had lots of incremental updates and continues to.

They renamed the entire company from Facebook to Meta least year, and then nothing really happened. No big software or hardware release. If anything it seems the rate of change as slowed down in that year. The Quest Pro finally came out a full year later. And the Pro feels like a VR devkit to experiment with face tracking and color passthrough - a product to play around with and hope a developer hits on a killer app - not to rebrand your company around.

Even just in gaming there's not much. Resident Evil 4 is still probably the only thing close to an AAA release and it's a port of a GameCube game. (Porting games of that era is a great idea though, hope they do a lot more it.)

Ironically I'm very close to buying a Pro as a PC VR only headset. A feature Meta barely even mentions. The other features don't matter to me but the Pro lens clarity is unbeatable. It feels so good to never have to strain to keep your eyes in the perfect spot where the entire lens is clear edge to edge.

Re: Susan Li

Unlike Google, they did not hire the former EVP & CFO of Morgan Stanley, and next in line for Head of Treasury before she withdrew (making too much money at ms to move).

I think Susan seems great from afar (i am but a lowly swe), but it's hard to see them similar in any way. Susan Li joined FB in 2008 after her first job as an analyst for ~3 years at, you guessed it, Morgan Stanley.

They’re budgeting $30 billion on capex next year so I don’t think your stock buyback comments are accurate.

What about my comment do you think is inaccurate?

I verified the number it’s correct and they bought back $21B last year and has now been buying back stock since 2017.

In their last earnings transcript (3 months ago) they do talk a lot about Reels competing with TikTok and making a lot of traction.

They say that Reels growth is very high, but they haven’t built the tools yet for SMBs to advertise well with it, so revenue was relatively low but a focus for them going forward.

Haven’t read yesterday’s transcript yet but I’d assume more of the same.

The bigger story is that Federal Reserve Interest rate policy is stimulating rather than slowing down the economy as desired. Higher interest rates is higher interest payments into the economy by the government which is the deficit spending. The problem with it is that its very regressive. So folks holding large amounts of cash are benefitting from the added interest income. In 100 years history will judge these guys as clueless buffoons. Hitting the accelerator pedal rather than the brakes.

Do you work at the central bank of turkey?

better yet check argentina.

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