Meta Q1 2023 Earning Results
investor.fb.com
investor.fb.com
This seems like a huge problem. Revenue looks ok, but shoving more ads into the products has to come back and bite them eventually right? I'm pretty bullish on META compared to most of this website, but if Mark keeps giving in to wall st. concerns there might be spiralling issues.
Imagine if they put 10% more ads in, and those ads made users reduce their usage of the apps by 10%... Overall impressions would be level.
But that isn't what they see - the impressions number increasing says they are successfully sneaking more ads in, without making many users go elsewhere.
I do wonder if they practice and prepare for that case - because the Digg social network failed so quickly (within about 96 hours), I expect they want to avoid the same fate.
Source: I worked at yahoo! way back in the day and lived through exactly this.
Certain parts of a datalake are not for fishing in.
The question is what do you do when you don't get the answer you want? - when it shows that you are losing audience, though perhaps slowly. It is very difficult/impossible for a manager to say "let's miss this month's revenue goal for the long term benefit of slowing audience loss". And so instead you come with other reasons to explain the audience loss and/or justify keeping the ads. And so the audience loss continues. You are the boiling frog.
Granted, for most running businesses that's not enough to move the needle but I wonder how many other such levers meta has pulled now and how much it's gonna cost them down the line. When you are in super lean mode you might just not integrate it on day one now.
And then some of those just won't, ever.
Source: I work at Meta.
I realize that it's probably to prevent spam but I ended up just not posting on marketplace.
The link that we're literally replying to just described that it's growing in all major metrics. Stop letting niche internet communities for clingey geeks over-influence your world views.
My thoughts:
* they have a huge userbase throughout the world, which allow them to launch new products much more easily
* they’re printing money and will be for a very long time. They also have a huge amount of cash.
* they have whatsapp, which seems to have won the messaging war. I’m not sure why they still haven’t done much with it but the potential is huge (see weechat and all these types of super apps)
* they have been trying to get into payments for a long time, and the outcome could be huge as well. They’ve failed so far (brazil, india, libra/diem) but there’s no reason why it shouldn’t work at some point
* hardware is becoming bigger and bigger at Meta. That plus the massive investment into VR/AR and the fact that we still haven’t seen what AR product they’ve been working on
* to me the biggest argument is the strong engineering culture. I think the way the rules were set early and the way the machine is running can achieve a lot. What remains to be seen though is how companies like that can create new successful products without acquiring another product.
IMO Meta could be much more successful if they focused on:
- spinning off new products based on the tech they have (why are they still not competing with cloud providers!)
- spinning off new products based on the userbase they have (they need to launch a twitter competitor)
- releasing hardware products more often. Why did they give up on Portal? Why didn’t they release more iterations of the glasses?
- giving people what they want on FB. Turning it back into a useful tool. For example, chronological timeline as a setting
I kid, I kid.
It's not a blockbuster industry quite yet, but something's happening. If nothing else, releasing a bunch of digital VR content isn't untenable for a FAANG business.
I was always a huge skeptic of the Metaverse conceptually, but it was a moonshot project (and I'll be the first to admit, skeptics are often proven wrong with moonshots). The problem is you can never have a successful moonshot if it can't survive a few bad quarters.
I mean the actual Apollo program took 8 years to achieve its goal of getting humans on the moon.
0. https://qz.com/meta-layoffs-2023-jobs-metaverse-ai-185019657...
What's really wild is that the entire Apollo program cost ~$25 Billion in 1973 (of course est. $163 billion today) while Meta already spent $36 Billion on the Metaverse [0].
0. https://www.businessinsider.com/meta-lost-30-billion-on-meta...
* a cheaper device so that every household can have one (think printer)
* less friction to use (lighter, faster start, no need to setup guardian and tracking)
* longer battery
* better experiences to hangout with people
I think anyone could be convinced of that if they tried like, playing Catan in VR with strangers (it’s mind blowing)
Sure, all of that sounds cool, I guess... But I'm not convinced there is such a big market for all of this yet. VR seems to be in a similar spot PCs were back in the early 80s (except no/minimal business and enterprise application according to what FB is doing which makes the market even smaller)
If there is any market for VR, it will be cheap entertainment headsets. They are the only successful market that has been tapped with VR.
The Quest has sold upwards of 10 million units (nearing 20 million by some estimates), while commodity VR like PSVR and SteamVR has continued pushing forward where commercial headsets failed. Everyone who isn't competing directly with Meta is just building another Hololens.
“A narrative has developed that we’re somehow moving away from the metaverse, but I just want to say upfront that that’s inaccurate.” They are doing both, and AI and metaverse are connected, according to him
looks like ad markets are recovering.
Additionally, user retention has dropped. At the same time, Meta blocked account deletion across its services (Instagram and FB), citing "technical issues." They also said that accounts wouldn't be deleted for 1-month from customer request. Convenient, eh?
So how does Meta report such huge earnings? Well, one way could be that Meta is generating fake account traffic to drive those numbers. Companies paying for ads don't know any different, because you're paying for impressions, not engagement/convergence (e.g., clicks).
The is why people say to delete your account, not just to delete the app. Meta need your account to be active to generate that fake traffic and rake in that ads $$.
Meta isn't the only corporation that leverages this tactic (i.e., generating fake ads traffic using customer accounts). Any corporation reporting a surge in Ads revenue is likely leveraging this tactic.
Companies are paying for impressions, but they will reduce their spending if the impressions do not result in conversions. It's trivial to tell if a visitor to your store came from Facebook, Google, or wherever.
If you start your statement with hyperbolic nonsense why would I care to read the rest of it? I just checked IG reels and I went through 36 reels before getting to my first ad. I admit that is way more than I even guessed it would be, but pretending 90% is reasonable is a joke.
You "checked your reels" and had experience A, when other people have reportedly checked their reels and post streams, and found a different experience. This is called personalization + A/B experimentation. I myself experienced more than 50% ads in my content stream last I logged-in in January/February (I don't really use Instagram). That was enough for me to not open up the app again.
I didn't pretend anything. You and your needlessly inflammatory position can take a deep breath. More oxygen and prefrontal cortex, less amygdala.
How to execute simulations of customer traffic? This would be leveraging Personalization Models and Dynamic Simulation Models.
How to write contractual agreements based on impressions, not engagement? This is contract writing, which is marketing and sales.
Marketers aren't stupid.
"Amazon Black Friday Ad Glitch Cost Advertisers Up to Hundreds of Thousands of Dollars" (28 November 2022): https://www.businessinsider.com/amazons-black-friday-glitch-...
"Facebook Ad Systems Error Causes Significant Overspend on Many Accounts" (23 April 2023): https://www.socialmediatoday.com/news/facebook-ad-systems-er...
"Facebook's Ad System Went Nuts and Ripped Off Customers" (26 April 2023): https://gizmodo.com/facebook-meta-ads-glitch-overcharge-refu...
Notice the trend? (i.e., Ad systems "error" causes overspend on ads customers never saw).
Are people still buying ads with FB and Amazon? Yes.
[1]https://gizmodo.com/facebook-meta-ads-glitch-overcharge-refu...
[2]https://www.cnbc.com/2021/02/18/facebook-knew-ad-metrics-wer...
I'm not sure[1] why I bother.
[1] Actually, I'm sure that if my mother leaves Facebook, so will I.
The momentum is clearly bullish, and it looks like it's going back to $370. Wall St. no longer cares that the Metaverse is burning money. That was last year. I remember all those 2022-2023 YouTube 'mini documentaries' about the 'death of META' or about Metaverse losses. So much for that.
Such as this video https://www.youtube.com/watch?v=zuqBRN5SJZ8
Mobile ad spending is insanely high, especially CPM and CPC rates. Huge multinationals spending so much money on ads, such as healthcare ads, retirement planning ads. Same for cloud, B2B..everything. When it comes to consistently high profit margins, cashflow, and market dominance and moats, Meta is close to unrivaled. It's hard to do better. Own FBL, which is 1.5x Meta.
Increasing ad impressions to make up for waning user growth is what a late-stage tech company does.
You can only increase impressions so much… it’s not a long term growth strategy.
Ads declining in cost is another red flag about the value of the platform to advertisers. But they made up for the decline by showing more ads.
Lastly, increasing profit with layoffs is another stop-gap solution, not a long-term strategy.
Meta is moving from an innovative growth company to a stagnant mature company looking to extract maximum value before the party ends.
You are trying to fit the facts to your own narrative, which unfortunately isn’t correct.
All I see is a company uncertain of realistic strong growth now cutting costs and aiming at higher eps to milk the cow till it lasts, might be a long time.
The Quest Pro dropped from 1499 to 999, but that headset was a boondoggle without a clear target consumer. I believe it was always intended to be a low-volume headset to get user feedback on early AR features, not a legitimate attempt to profit on hardware sales. Some of the Quest Pro AR features are expected to be included in the Quest 3.
I assume that a lot of the chips, and parts in the headset also went up in price since launch and it's not all just profiteering.
> The price of the 256GB Meta Quest 2 will drop from $499.99 to $429.99, while the price of the higher-end Meta Quest Pro will be slashed to $999.99 from $1,499.99.
My guess is that the Quest 3 is coming and they think the Quest Pro original pricing was a mistake that prevented it to find its market?
It's like a gaming console with no new games.
Other moves have been suggesting that Meta will draw down their investment in VR, likely due to not hitting the product market fit in Social and Social-Business they were hoping for. Games will probably remain a focus while the tech matures to the point where AR applications can take off (or Apple proves theres a market).
Plus, Meta alienated a lot of early supporters by pushing the Facebook account instead of Oculus one; by making BeatSaber with custom songs miserable; by slowly shutting down Echo Arena VR and many other stupid things.
They might still come around, their technonogical momentum is real.
I was laid off last month from a startup, and finding a new job is as difficult as you'd expect these days. So any signs of strength in the tech sector is encouraging.
On the other hand, AFAICT Facebook really is bad for most people*, and I'd like that company in particular to fail.
* I recognize that I could be wrong about this.
Once again as I said before, the last earnings [0], the death of Meta Platforms Inc. (Formerly Facebook Inc.) has been greatly exaggerated.
Ever since the low of $88 it is now over 120% up. and almost no-one bought it back then and was too busy screaming about META going to die, because of layoffs. It's over etc, etc, etc. [1]
It's business as usual folks.