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Comment by dageshi | Hacker News Reader

Tech companies are valued by how they dominate particular sectors/niches and the potential growth of that sector/niche.

Facebook doesn't dominate social any more like it once did. It did so with Facebook itself then with instagram but TikTok is grabbing the current generation of new users.

It can't grow like it once did and usage of its existing services will gradually decline.

It's betting that the metaverse is the next social medium after TikTok's short form video. Personally I doubt that but that's the bet they're making.

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> It can't grow like it once did

1 in 4 people on earth is using FB every day. They simply can't grow more too much.

This is the most fundamental problem. In order to justify a "tech" P/E multiple, it has to be the case that exponential growth in the future is justified. For any MAMA (Meta, Apple, Microsoft, Alphabet) company, this is almost certainly impossible. This means it is time to transition to being a boring, reliable stock, probably with a substantial dividend. I'm not sure Zuckerberg is ready to do that.

PE ratios for big tech.

Google: 20:1 Amazon: 100:1 Netflix: 30:1 Apple: 22:1 Meta: 18:1

(For the financially illiterate like me who wanted to see what various ratios looked like. Meta (Facebook at the time) used to have a 7:1 ratio when they printed money before they doubled headcount while revenue flagged. If it weren’t for that hiring spree, they would be under 10:1 and not in the same class of “tech” multiples.

They go full Musk and colonize Mars so that they can achieve the exponential growth that investors expect.

> It's betting that the metaverse is the next social medium

Apparently that's no longer the case: "Mark Zuckerberg Quietly Buries the Metaverse"[1]. Company name looks just silly at this point.

[1] https://news.ycombinator.com/item?id=35023493

Meta dominates the display ad market though, that is all they care about. Once TikTok is banned in America, they can grow it further.

TikTok isn't getting banned, don't be silly.

Is it silly? It's already being banned from US and European government devices. It is just one more sentence away from being banned for general population in those huge regions.

There is big chasm between banning an app from fleet devices and banning both an app and a website in an entire country. Especially one that is so enormously popular.

I cannot recall the last time I've seen such a bipartisan push for something so monumental. Just within the past week, Senators Josh Hawley (R-MO) and Mark Warner (D-VA) have been saying virtually the same thing: TikTok is an unprecedented national security threat.

they're literally just forcing them to build datacenters to keep the data for Americans in America (and Indians in India, etc). TikTok is already publicly hiring a ton of people for this

Once the data doesn't leave America this is going to go away.

This is not that much different than just complying with the type of regulations the EU has. The American version is just involving a lot more chest pounding and fluff because there's no existing laws to enforce to make them do this. So they just have to do it through threats and relatively minor policy changes (like banning on government phones).

I'm honestly more surprised that any social media apps were ever allowed on government devices.

Yes it is. The government is just trying to get the data to stay within the US. TikTok only needs facilities here (and maybe some sort of air gap) to comply.

Were US and European government officials/workers really big TikTok'ers to begin with?

TikTok got banned in India. I don't see why it can't get banned in US given CCP's complete control over Chinese companies

India regularly bans sites.

just last month https://www.npr.org/2023/02/14/1156726845/indian-tax-authori...

USA is different

TikTok's highly unlikely to get banned, and if it was then 10 new replacements would pop up overnight. Facebook isn't anything like TikTok and likely never could be. Instagram might get close but even then its not the same thing.

Also the display ad market is only useful if you've got people to advertise to. The more Facebook continues to turn into 'social networking for boomers' the less and less they'll make.

They have 2.9bn monthly active users.

Like, I left FB five years ago (after staying there for 5 years), and literally HN has been telling me that FB were doomed for all of that time.

I totally agree that TikTok is a very strong competitor, unlike what they've seen before, but writing FB off right now is probably not the wisest long-term decision.

How many in the US, and how many with desirable advertiser demographics. Selling reverse mortgage and pharmaceutical ads to boomer audiences turns you into television, where--at some point--the audience is going to pass on and leave it behind.

A bit hyperbolic to say HN groupthink => "FB doomed". More like FB is over valued and their product has stagnated and alienated their user base.

Facebook acquires IG (over ten years ago now), HN comments: https://news.ycombinator.com/item?id=3817840

>and if it was then 10 new replacements would pop up overnight

https://www.youtube.com/shorts

already here

and not a chinese company

if Im gonna brainrot Ill use youtube

Attention just in itself has zero value. If companies are paying Facebook to advertise there, that is where the value is. Personally I think social media advertising is a pure scam industry, but so many small companies want to play that casino, and Facebook makes that easy for them.

> Tech companies...

Is Meta really a tech company? It takes a lot of technology to do what they do, just like Netflix. But their core business isn't technology pre se, it's social media and advertising. I don't think they're the same class of businesses as Microsoft or Apple. Google is closer to Meta in terms of their revenue sources, but they have a much more diverse technology offering.

They are trying to become a hardware company with their VR line, but it feels more like a hobby in the Apple sense of the term. I.e., a division with small revenues and without a clear growth path.

So Google also isn't tech company. Their core business isn't tech but also advertising after all. Using your logic there are almost 0 pure tech companies.

You could indeed argue that. I think there's a difference between the product and the revenue. Google still feels like they produce a number of technical products, even if their revenue is mostly driven by ads. GCP, Android, and Chrome would be examples.

You are right. We never called movie studios or TV Channels "tech companies" even though all their work is distributed and created by technology.

Did movie studios and tv channels employ large departments of researchers and engineers that developed and deployed the technology?

I don't know.

Yes? It’s not common anymore due to the technology maturing, but on its heyday the TV channels were on the forefront of technology. See the development of color television and much more recently (and I’m most familiar with it), the digital TV standards.

Personally I'd say that if your company primarily builds its product(s) via programming then it's a tech company?

It’s a public company that makes money. Why would it be valued differently than any other public company that makes money? Do people expect 10x growth?

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