Meta Earning Results Q3 2022 [pdf]
s21.q4cdn.com
s21.q4cdn.com
Realistically they had one big growth avenue and that was acquisitions but the regulatory (or rather political) environment doesn’t allow for it.
I get that it is hard to let go of that growth mindset after 20 years of crazy growth but at some point the journey ends and you have to reorient the business (imo). I am not saying stop investing but scale it down a notch, set realistic budgets, pay a dividend or buyback stock. Maybe if they had shifted their mindset away from growth at all cost earlier they wouldn’t have gotten such a bad rep.
I feel the same about Google. I wonder how much money their non-ad, non-cloud stuff made of its life time and if it has been profitable.
In the end the goal of a company (whether you agree with it our not) is not to get as big as possible but to generate as much cash for its shareholders as possible. And I think Facebook over extended with going all in on Meta.
But perhaps I am looking at this with too much hindsight.
Facebook's goal is to do whatever Zuckerberg wants, since he still controls a majority of the votes. It's a fascinating test of the value of corporate governance rights.
60-80% of the cost base in many F500s is bullshit (exceptions exist. FMCG, any industry where physical products make up their balance sheet. Not salaries). Any excuse to avoid returning money to shareholders.
Everyone quietly acknowledges. If say, Visa, really tried, they could cut the cost base by 50% and achieve the same output.
Carl Icahn style shareholder activists have a point.
Forget tech companies. Most public companies are a conspiracy by VPs/C-suite/board.
The difference with tech companies is Google feather-beds its EMPLOYEES with free food.
From a pure capitalist standpoint. You could run Facebook's business on 20 billion USD in costs. Their cost base is enormous because Z has ZERO interest in cutting costs.
He's in it for the ego/vanity. Same as every other F500 CEO/Chairman.
Ego is the driver, not the balance sheet.
> What is clear is that Zuckerberg in particular seems more committed to VR than ever. It may be the case that he is seen as the founding father of the Metaverse, even as Meta is a potential casualty.
My guess is this is going to be a really rough winter / several quarters for Facebook until they reconsider.
Zuckerberg seems to envision matrix-style VR where it's 24/7 immersive and nobody outside a very small fringe group is at all interested in that proposition. I just fail to see the value proposition of VR socialization over video and even voice calls. If you'll recall even video calls have only really caught on since the pandemic - skype did business pre-pandemic, but it was still a fringe tool for social purposes and much more likely to see use in a work setting. It might be that VR can break into the workplace - but I have my skepticism.
I agree with you VR is not the future but AR definitely is, and even Apple has been making silent but consistent investments in AR for more than the past 5 years.
It's interesting to see the differences of opinions on this subject. I believe this will pan out in the opposite direction.
As a consumer, AR seems so weird to me. I don't want to put on glasses or goggles to see overlays of the world around me. I want interfaces to be simpler, not more complicated and crowded.
While AR hardware has improved, the software remains reminiscent of Nintendo DS Face Raiders [1]. I'm just not being sold on a day to day use case for the tech. Maybe Apple or Meta will teach us otherwise, but I can't even imagine it at this point.
I do see AR being useful for a limited number of industrial applications. You already see quasi-AR virtual film cameras working well (cameras without a lens that capture xyz-orientation in virtual space for the purpose of pointing a virtual camera). But these don't even use optical overlays.
On the other hand, VR enables infinite workspaces, telepresence, new kinds of 3D creative tools that place you inside the thing you're building, world isolation, closer to full sensory immersion, etc. Rather than a tool that serves as an overlay of the existing world, it puts you into a new type of cognitive body altogether. Metaphors of movement combined with spatial reasoning can unlock new abilities for the human brain. Like gestures, but full body and mind.
You can already see the advancement of AR software by holding up your iphone and trying out the various AR features that overlay things in the real world and can even use the depth sensor to occlude your hand. Or try out Google maps AR view which literally does a video game style overlay of the path you need to take over the actual world. Maybe you don't like these things, but I think they are objectively cool, and right now only held back by a lack of hardware to make it convenient to do AR in every day scenearios (lightweight glasses or goggles). But, Apple is working on that, and so is Meta, and since technology advances by Moore's law it's only a matter of time before the glasses get light enough and comfortable enough that we don't have to hold up our phones awkwardly in front of our faces to do AR.
Things that AR can accomplish:
1) Overlaying peoples' names so I don't have to remember so many names. Not a problem for many people but some people have a hard time remembering names. 2) Always there real world overlay of directions so you don't have to keep pulling out your phone. 3) AR games and entertainment 4) No need for giant physical 2 dimensional information displays in the real world. Once AR gets sufficiently clear and high enough resolution there is literally no need for physical displays... only virtual ones. The whole point of physical displays since inception is to show information, sometimes 3D information, on a 2D surface. We've been trying to make them smaller and smaller ever since... what better size than no size at all. 4) The whole point of any digital display is to augment our eyes with information. The ultimate display is one that is right in front of your eyes. AR is the next logical step for digital displays.
I will give you one case where I would give in, though: automatically translating and overlaying foreign text. I'd wear a set of AR goggles if it improved the experience of visiting countries that don't predominantly speak English.
As a counter anecdote, I fully support AR - the idea of Google glass would have been very appealing for me if they could actually use the lens as the screen and it was less bulky.
Perhaps it's just years of seeing heads-up displays in anime and sci-fi movies (e.g. Terminator) that's pushing my desire.
If they can eventually solve the bulk and creep issue (ie, always-on camera that can surreptitiously record at will) it will become a useful addition to the phone/watch personal nimbus of data.
Anyone who knows the digital gaming industry understands. Content is hard.
The Metaverse seems like it has Zuc supplying a vast amount of first party content, instead of integrating with third parties better to supply skins and content.
There’s really only one company in the world that’s able to do that better than anyone else. You guys know which company that is.
So it’s very very hard for them to be as successful in that space
The physical product creaks and groans, and the software UI is android level.
Tesla just has the convenience of competing with luddites
Carl Icahn story about cutting costs: https://www.youtube.com/watch?v=WSatPoD2W-o - fired a building full of people, never heard about it again.
Most companies are run as bureaucracies, dual share classes haven't helped. There is no difference between your average Google employee and a civil servant.
Unfortunately, this is a pretty raw deal for shareholders. You cash out insiders, the bureaucrats move in, the amount of cost extends to the revenue base, eventually revenue slows down (bureaucrats don't tend to be good stewards of capital), the rats all leave the ship, you find out the cost base could have been 50% smaller all along, and you are left with a stock on its way to bankruptcy.
- We should go for something akin to universal basic income? Given we could produce a bunch of output with very few people (I guess at that point it's more and ideological question of if these few people that get to stay + shareholders are going to get all that value rather than someone else) - People that are talking about "productivity growth" has declined the past 20 - 40 years, are probably wrong and we have seen productivity growth, we've just filled it up with useless stuff and made up jobs? - It also sort of implies that some of the projects that Google and Meta has taken on even though not financially sound right now haven't produced any value for humanity (and I fully understand that in a capitalist society; profits are the way we value things). I think they have and a lot do (like long tail stuff like producing knowledge, producing open source tech, driving tech that while not mature now, will explode in the future, VR + self driving comes to mind)
Another thing that comes to mind when it comes to founder driven companies doing whatever they want is all the Elon Musk companies. He has also made a bunch of crazy bets that "value"-companies would def not have made.
as part of an already very good compensation package.
They can extend that to these voting class shares imbalances and start a cascade of changes
People who value stability and work-life balance. It's great for people who see a job as a way to fund life and put something away for security later in life, not as a calling they're willing to sacrifice everything for.
It will eventually be a problem (in the sense that switching to GOOG or AMZN will be a much better prospect) if the stock continues to go down, of course. And a new hire evaluating their stock package should probably be a little concerned about the trend.
The infrastructure to support you getting your work done is great. There are reasonably interesting software problems to solve. There are smart people to work with. There are some good benefits.
Never mind the convoluted tax implications of exercising options that are nominally not underwater, but whose stock has a lower value that at the time of granting.
If you factor in taxes, you could end up owing more in taxes than the shares are worth (ex: vest price is $10/ea, taxes are $3/ea, current price you can sell at is less than $3 == underwater).
I think Aurora employees were locked out for 180 days, but force to exercise options at IPO price.
[0] - https://www.cnbc.com/2020/08/28/nearly-200-uber-employees-su...
Think about it this way: Giving 20 billion in new equity per year when the market cap is a trillion dilutes everyone 2%. When the market cap is 500 billion you are now diluting everyone 4%.
When the company is growing you don’t see the dilution as the increase in stock price is much higher. When it’s static this drags your shares down over time.
No, Mark wants a war chest and will increase investments for his meta verse.
But I would never bet against Mark.
I remember when Facebook was invite-only. It was cool. Everybody wanted in. This... I think this is grounds to bet against Mark.
You didn't read TFA, the earnings report explicitly saying the significant amount of buybacks they did.
I think that's part of the problem to be honest. People who have a reputation for never making mistakes tend to double down rather than acknowledge the mistake and back off.
Imagine going straight from your early 20s into a position where you're hailed as never making a mistake. IG, whatapp, etc all panned out. What happens when you finally do spend $2billion on a failure such as oculus? Do you note the failure and back off or do you start spending $20billion a year, change the company name and double down (to the power of 8)?
Anyway at least this instance of it is more harmless than Putin's example in global terms. It's still reasonably clear to me what's happening though.
No buybacks, like this?
At least from my experience.
META more than other big tech companies has been scaling back significantly this year and were one of the first to do so.
They're also buying back a ton of stock and with operating margins in excess of 80% it's almost insane how conservative they've been with spending money over the years. This is hardly a "growth at all costs" company. This is one of the most profitable companies ever.
META also isn't going "all in" on the Metaverse. They're investing a portion of their cashflows on AR/VR technology. The media is so focused on the headset that I think people are missing the fact that in a lot of ways META is inventing the wheel that will support the AR/VR products of the future. Even if they don't make a success of their Metaverse, their technology will still have real value to the ever increasing number of companies operating in this space.
TL;DR: META is trading as a value stock, they are cutting back, they are returning a ton of profits to shareholders, and they're not going all in on growth or the Metaverse.
Part of the reason Meta is crashing is because they are being even more aggressive/spending more on metaverse next year than they previously stated.
19% growth in costs while having -4% revenue over the year ago quarter.
https://investor.fb.com/investor-news/press-release-details/...
June 30, 2022: $5.233B
March 31, 2022: $9.506B
December 31, 2021: $20.06B
September 30, 2021: $13.46B
Last Q they made 209m in revenue on other bets, and lost 1.6b on those bets.
The only profitable business for Google is Ads.
Cloud, and other bets burn about 3b dollars every Q.
That's like asking Apple how much money it made from sources other than hardware sales and online service sales.
and
> the journey ends and you have to reorient the business (imo)
Isn't that the point of reorienting themselves to the meta verse. It is a new, unconquered land with virtually unlimited space and possibility?
Arguing against myself now: while this might be true from a product standpoint, their business is advertising, so unless they find other ways to monetize, the growth rate is limited by advertising dollars / share.
Man, why does everyone have the same values nowadays as Milton Friedman and The Warthog?
Relevant video clip: (NSFW, very offensive language) https://youtu.be/7j1850-qlm8?t=19
Facebook's (stated) mission isn't to make money or get big, it's to bring people together. If they can make VR user-friendly and ubiquitous, I think that will serve their stated goal.
If Facebook just decided to hunker down and count their money, they'd be doomed to eventually fade away just like so many tech juggernauts have in the past.
The business plan so far seems to be:
1. Make VR work
2. ???
3. People come together!
Smallprint: make lots of money along the way...
I am interested as to whether there exists a concrete plan for step 2 but I am dubious of this direction.
Difficult to make them come together without throwing up, literally. I almost got to the point where only thinking about the abstract concept of VR makes me a little dizzy.
But the logic goes something like this: Zuckerberg has built a $1 trillion company already => he knows what he's doing => we should trust him with the tens of billions of dollars he's throwing at this, trust him that is compared to the schmucks that say that this won't go anywhere, they haven't built $1 trillion companies themselves.
I predict that around the mark of $100-150 billion thrown down the VR drain some share-holders will actually start to throw some hard questions at Zuckerberg, and in another one or two years after this the project will have the fate of Google+.
If you could toss on your VR helmet for 2 minutes to pop into VR and chat with someone the way you can open a Zoom call today, it'd be a huge quality of life improvement for remote work. Or like Carmack was saying recently, you could get to a point where it's cheaper to mail out a thousand headsets than to host a conference in person
Tangential edit: Man, how nuts is it that Facebook is throwing billions of dollars a year into this? Palmer Luckey invented modern VR in his spare time as a kid living in a trailer next to his parents' house. You've got VR startups out there making interesting devices, amazing multi-user worlds, and all sorts of other things for a few million bucks per company. It makes sense that if they have the money they should try to do something useful with it, and silicon valley engineers/hardware development don't come cheap, but that's just such an incredible amount of money.
Look where they were in the mid 90s when they were already 20 years old compared to where they are now.
Apple and Microsoft are much more mature companies than Facebook is. Microsoft had major restructuring a couple of years ago. And I think Apple also had some major reforms internally around 2015-16 to make its operations more efficient. Apple accumulated a massive amount of cash over that period.
I am not as much into it anymore as I sold most of my holdings near the end of the pandemic. So maybe things have changed since then.
Netflix is another company I have serious questions about. Not sure about their current situation but around 2017 when I looked into them, they were essentially a company that sells you a dollar for 99c. Their ratio internal content/external content was not high enough which meant they had massive recurring licensing costs which they funded by a mix of subscriptions revenue and debt (a lot of debt). The story was that that would be ok once they reached ‘scale’ as costs would be the same but they would have more subs. In my opinion that logic is flawed since presumably the cost of the licensing deals will also rise as more players entered the market and content holders got less money from traditional sources (because everyone uses those subscriptions services now). Netflix made sense when they were able to buy the content for cheap because they were niche.
My opinion of course. Im just a random dude on the internet.
On the Apple side, the iPod, iTunes, the iPhone, the iPad, and the watch were all unproven projects.
On the Microsoft side, giving up immediate revenue from selling Office for $600 - seat into a subscription service for $69-$99 a year had to be a short term revenue hit. Not to mention XBox which loss billions before becoming successful and Azure.
Meta doesn’t have a choice. I really hate the Facebook product. Not because of the privacy angle, it commits the worse sin of any product - it just sucks now. Most of the post I see aren’t even from people let alone brands and websites I chose to follow.
At the same time it feels like the Apple Lisa. Expensive hardware that’s clearly still not quite the end state, shipping with first-party software that’s barely past demo quality. There’s simply not very much to do on the Quest Pro so far, and the HoloLens trajectory suggests that real apps will be slow to arrive.
Still, it’s an entirely new style of computing and Meta has subsidized it by tens of billions of dollars already. I’ll try to enjoy it while it lasts.
"Built for a Future That Still Isn't Here" is a headline I saw somewhere that resonates well with your comment.
Also, I can pet my dog and even throw him a ball while writing comments on HN, but the VR thing will totally isolate me from him (and the AR thing won't bring anything new to the table, I already know my dog's name, don't need to see it labeled via AR). And even so, I try to limit the time I spent in front of my computer, glueing even more immersive computers to our faces won't do us any good.
Can't you play Quest 2 games on it?
It doesn't inspire much confidence in me to compare it to the product that everyone thought was cool when it came out but over a decade later, even the company making it still doesn't know exactly what it's for outside of a few niche use-cases.
If all iPads disappeared off the face of the earth tomorrow, it wouldn't be nearly as big of a deal compared to if that happened with smartphones or laptops or PCs, etc.
Meta has a big hurdle to overcome to make success out of a device with no real practical use so far, and one that you have to strap to your face.
Many people have replaced their laptops and computers with an iPad because they only check email/Facebook/watch youtube/surf the web.
It's a $30 billion a year business.
Maybe they know a little more than you think.
I just don't understand why humans buy them. Sure, they're neat, but there are a lot of neat things at that price point.
This shouldn’t be hard to understand.
To me, an iPad is a notebook that's always with me, where I write down all my thoughts in my journal, practice writing and screenwriting, do task management and planning (most of that in Obsidian). I also watch video courses, listen to music, browse the internet, all the stuff everyone uses their mobile devices for.
Smartphone is too small for typing, and not as convenient, no other tablet is anywhere near as convenient to use. iPad mini is the perfect form factor for me.
My parents have completely given up on laptop and own three iPads because they are easier to use and maintain. They don't break or have bugs are often which required them call me and having me come over to fix lol.
Every boomer in my life has an iPad. They don’t own computers anymore.
Also word processing/publishing. Very clear applications with an existing market.
2019: Net loss of $4.5 billion on $501 million in revenue
2020: Net loss of $6.62 billion on $1.14 billion in revenue
2021: Net loss of $10.19 billion on $2.27 billion in revenue
2022: Net loss of $13.21 billion on $1.72 billion in revenueAt that rate, they'll have a $17.2 billion net loss on $2 billion in revenue for 2023...
... and then everything will be fine.
I was still on the 10B figure. At this rate they are going to reach 50B pretty soon.
What is the limit? 100B?
I understand why this is taking time, R&D and stuff, but I have some difficulties to understand how they manage to burn that much money.
An ecomm company in the UK went bust today, Made.com. They had a decent business, they sold furniture online, but their main issue was cost. All obvious, they had hundreds of people working in single divisions, it made no sense at all.
But they never attempted to cut cost until it was too late. I have seen this before, and it isn't "forgetting"...it is a physical capacity. You hired the 32-year old guy, he has only ever hired people, and you tell him he needs to fire 10% next week...he will start ducking you, what do you do? You can't fire him now, you need him to fire everyone else...most companies can't turn it around in time (Made was also run by people like the 32-year old, "entrepreneurs", everything will turn around soon).
We could say that they've spent on the order of 10 gigadollars.
What’s more baffling to me is that we’re now several years into this “bet the company” XR pivot and nothing really seems to be coming to fruition. Yes they sold a TON of Quest 2s - via a financially ruinous subsidy and then everyone tossed the device in the back of their closet.
They’ve spent a ton of money buying every successful VR game studio they could get their hands on for three years - and still have NOTHING but a handful of BeatSaber music packs to show for it.
The Quest Pro was supposed to be positioned as a less expensive HoloLens for businesses while also getting Meta some real world experience with eye/face tracking. Thing is: the original device was supposed to have a depth sensor and it got removed at the 11th hour. Which, imo, completely ruined the HoloLens-lite positioning since the only AR differentiators over the Quest 2 ended up being slightly upgraded SLAM cameras and a janky color overlay. All the meatspace positioning had to be offloaded to an already over-worked Qualcomm SoC. And without those advanced AR capabilities, the Quest Pro is essentially an upmarket blend of the Quest 2 and the Pico 4.
Which leaves the Quest 3. And we’ve seen enough of it from leaks to know it’s actually a compelling upgrade to the 2 - but it’s not expected to launch until 12 months from now. And it’s certainly not representative of what you’d expect from xxx billion dollars worth of hardware R&D.
This comment is already too long so I’m not getting into the Metaverse thing, but it’s probably the biggest failure of them all.
Tl;Dr: Imagine if Google launched Stadia along with an announcement that they were pivoting to the console market. Meta’s VR pivot is ALMOST at that same level of a self-inflicted mismanaged disaster.
With the amount of R&D that was spent on Metaverse, it better shit gold for Meta for decades to come.
Second, how are they generating $1,7 billion dollars in revenue from the Metaverse?
There are a lot of cool things you could build on top of a verified identity.
Even if VR and AR pan out I doubt apple would lose. They just have too much control over the entire stack.
How Microsoft and Google, and Meta allowed Apple to slowly build over independent control of their entire ecosystem, from supply chain to software is baffling. They’re gonna get wrecked.
Yet from a business' perspective, the experience is really poor. Most have to rely on third party tools to sell and chat with customers.
The failure to capitalize on their userbase with accessory businesses probably has more to do with the VC/Silicon Valley obsession with the hot new thing and what they hope will be the next new hot thing. Commerce is boring, TikTok and VR platforms are much more exciting.
Progress is being made on this front, albeit slowly.
They did seem to make a push for more business API and more marketing messaging permissions. I invested some time in developing it for political campaigns.
Only for them to yank the more open permissions away.
And much of Europe.
They've tried these things - you mentioned an example of one yourself.
Apple won't lose but equally they won't dominate.
There will be a space for an open, collaborative market leader exactly what Meta is positioning for with their recent partnerships e.g. Microsoft.
And if you ignore the metaverse nonsense and extrapolate hardware advances over the next few decades AR/VR could be compelling. It could replace laptops. It could change what travel, concerts, arts events looks like. It could democratise education.
I understand Meta is trying to generate hype and attract talent but I also hope that we do get far more serious at what AR/VR could mean.
They're trying this in India through WhatsApp by patterning with Reliance.
https://about.fb.com/news/2022/08/shop-on-whatsapp-with-jiom...
Google didn't. They built Android and Chrome and ChromeOS to counter that issue and frankly it's been widely successful.
Microsoft tried (but failed) with Windows Phone.
Semicos, Google, Facebook, MSFT
What do you call a stock that's down 90%? A stock that was down 80% and cut in half again.
Everything was taken back to pre Covid levels. So if you can imagine we are back in 2019, whatever Facebooks price was, plus declining user base, and the Apple fuck you, it has room to drop.
If you look at history, everything converges back to fundamentals in the long run; as many tech investors are starting to find out.
But to answer more directly, the current price is only good value if Facebook can grow its earnings over time. Right now they’re shrinking.
Companies with shrinking earnings tend to get single digit multiples
VR strategy fails, acquisitions stop due to regulatory issues, loses ad marketshare to Apple, TikTok continue to eat its lunch. As a result, stock gets even lower.
There you have it. Is this a very strong argument? Probably not, no, but it's a possibility.
VR is prob. the only thing that remotely looks promising for META now.
Vaguely remember when it was a big deal, but not why.
That's much harder for competitors to disrupt, especially when you give people tools to amass and customize content on their pages. E.g. wiki's, info, etc.
Inertia isn't a moat.
Source: I've re-spanned my social graph several times since Usenet.
It's fine. People aren't corporations.
Their revenue was $27.5B with COGS $5.7B vs. fixed costs of $16.3B. The cost of reality labs was $3.8B, let's assume for simplicity that it was all fixed costs. Plug those numbers into the formula, and it'd be a $2.5B loss. If their revenue was cut in half, they'd need to slim down massively in the non-RL segments to even break even, let alone be more profitable than now.
Is it though because the data doesn't suggest that.
It suggests that TikTok is dominating amongst younger audiences and that short form video content is a specific segment.
The only way I see them recovering is regulatory action, either:
1. The White House bans tiktok, (hopefully, in FB's case) shifting TikTok's eyeballs to Instagram.
2. The White House forces Apple to undo informed tracking consent.
Personally, I believe Facebook was digging their own grave in 2010 and handled the privacy problem incredibly poorly. While consumers were unlikely to stop using Facebook, it left them wide open for Apple to kneecap them and now Zuckerberg's, likely correct, concerns that Apple doesn't really care about privacy falls completely on deaf ears.
Zuck needs to push his lobbying minions to make that the full-court press on Capitol Hill.
And that's exactly what happened...?
The president, orange or grey, is privy to information we are not.
Tiktok is a national security threat; orange-man-bad isn't a staple in any useful political discourse.
Neither of the things you mentioned have any impact on 90% of Facebook's users.
Do you know anyone who uses Facebook any more? How many Instagram users you know look at the ads?
Why do you believe it'll go back up from this price point instead of dropping another 50%+?
If you think that $69 is a good price to pay for CSCO I’m happy to sell you as many stocks as you want.
So while they are still insanely profitable for their core business the growth story is over.
In no other company would a CEO be allowed to essentially go rogue like this. All companies with dual-class shares will eventually trade at a discount, this is FB's time.
I don't even think the Metaverse is a bad idea, but applying the SV mentality of: we just need to lose more money than anyone else won't work, that isn't how the real world works unless you have someone even dumber to pay you off (i.e. stupider VC fund, IPO)...FB is top of the food chain, no-one else is coming in on this.
They either need to slow the cash burn (the numbers are just ludicrous) or spin the company (not possible).
This kind of thing happens and the discount can last literally decades. With dual-class share, there is no way to close it and most investors know this so they are just selling.
I will say it again: dual-share class isn't smart, the market isn't dumb, investors aren't stupid, it will go wrong eventually and everyone else is paying the price for Zuckerberg's own desire for self-aggrandizement.
To be clear though: he has created this situation. If he lost a reasonable amount of money, none of these questions would be asked. Anything north of $10bn is just madness, $5bn is bad, $2-3 is probably about right. It is all sustainable within the current situation, he just has no-one telling him how bad this all looks (what it looks like now is the opposite of the final scenario: man who is worth hundreds of billions rinses public shareholders for his fever dream VR fantasy).
Innovator's dilemma is all operational, so it should be separate from FB. Capital allocation choices are distinct from all this (the innovator's dilemma exists because CEOs are usually terrible investors/capital allocators, there are maybe 20 CEOs who have ever run a public company who can allocate capital well, Zuck actually had a decent rep before this because of his acquisitions but he is torching it with VR, which is clearly very far from commercial revenue).
This is how literally ALL the technology you use was developed. Huge, multi-decade spending on R&D until it works. Literally any technology you can think of.
I can't think of any technology that required multi-decade spending on this scale before revenue, fusion? If something needs multi-decade spending, it is either a scam or uninvestable.
I wonder if Meta would be going all-in on a VR system that nobody seems to want if Sheryl Sandberg were still around. She seemed like the only one who could say no to MZ. Granted, there are lots of other factors (TikTok, recession, Apple's privacy changes), but it is an interesting coincidence.
Actually, it happens all the time. The business press had been full of these sorts of characters for centuries.
Currently, even within the HN bubble, there's Mr. Musk, and several others.
Example: the share price of K-Mart was 134 dollars in 2007. Now it's 15 cents. And people were buying the dip all the way down. Think it will come back?
After all, no company lasts forever. Eventually they all go to zero and are replaced by some other company. That's why buying the dip just because it's a dip is a fool's game.
https://finance.yahoo.com/quote/SHLDQ/
Does not seem that great of a gamble for a few thousand dollar gain at most. Las Vegas seems like it would be more fun.
The question you should be asking is what are the company's earnings growth prospects going forwards, and how does that compare to the stock's current valuation.
the concept relies on an idea of aggregate information converging to an average best price in advance of the information being available to all. it relies on someone smarter than everyone else recreating all financial inputs to the company and having enough capital, risk profile and time horizons to exercise that opinion. When even that stretch of the imagination can be undermined by someone richer just wanting to get out.
Price people will buy/sell = function(their predictions of the companies future)
Considering Meta's business is advertising.
The fact advertising revenue is flat in the Americas & Asia is a strong signal companies are not cutting advertising. Ergo, no massive collapse in consumer confidence is predicted.
It's just Europe that looks dire.
Or at least that's what Meta wants you to think.
Certainly was the case for me. I certainly overpaid for a lot of things recently. But we had our big festival here this week and now I'm tapped out. Next year will be a year of sobriety - at least for me.
It's in the first bullet point on page 2:
Revenue was $27.71 billion, a decrease of 4% year-over-year, and an increase of 2% year-over-year on a constant currency basis. Had foreign exchange rates remained constant with the third quarter of 2021, revenue would have been $1.79 billion higher.
EDIT: who thinks there would still be explanatory wording added here if forex rates had moved the other way and revenues had gone up ... ?
Metas real problem is TikTok, Apple and the cultural zeitgeist
Yeah it was particularly funny that it was posted on Tiktok not Instagram.
If you have people working on designing and improving a product who are ultimately not even willing to use it as a their daily driver, you get the kinda of disconnected mess that is that UI in Windows and the sometimes baffling decisions made.
I can't help but conclude that the problem is that it's presented by a young woman.
With a hint of ignorance and jealousy.
If you think you can get through the infamous Meta interview like she has then go for it. I probably couldn't pass that interview myself so she's better than I am.
I have a distant relative who was working in javascript as his main job. But he didn't know what typescript, coffeescript, or web assembly were; even though he was working with javascript as his primary language. Nothing he described or talked to me about gave me the impression that he was able to do any programming whatsoever.
But, he was 100% a "total frat bro". And of course he landed a job at Google. As a programmer. Am I jealous? Sure. Do I think he is capable of creating intricate things? Absolutely not. Do I think he will survive at Google for a long time? Definitely.
Maybe he's just good at the job even if it isn't his whole personality?
Like how do you think someone would get through Google's interview without being able to program? You have to be the very top of your field to pass that interview.
You really will be surprised if you have a decent standard
Because you can be productive working outside, on a roof top, on a beach etc.
And making the time to eat well and look after your mental health has been proven to increase productivity.
Most jobs out there are sitting nearly 8h at a desk, with breaks of course, even in Europe. Not everyone has a hot jobs market where you get to set your terms.
Dicking around all day without doing much work is something I've never seen at any tech company I worked here but only in YouTube videos on life at top tech US companies.
Maybe I was born in the wrong county/continent.
Because she's allowed to take a break for lunch and she can work from an outside space? Your standards are too low.
Strictly speaking, she says she did some work "on the roof in the morning" and then doesn't mention work again at any point. In particular the video gives the strong impression that she might have simply gone home soon after lunch. Maybe not in reality, but it strongly looks and sounds that way from the vid. She says explicitly "I got lunch, I got a snack always, I then shuttled home" i.e. the phrasing means going home immediately followed lunch. You also have to wonder how hard she can be working and how well supervised she is, if she's posting videos to their primary competitor of herself dancing on the roof.
There's also a more subtle issue here than the lack of work. She talks like someone whose primary interest is her own looks, not anything to do with tech. She talks repeatedly about how cute she looks, how she spends time working out to look cute, and a large part of the video is her posing in the mirror. Even something like the actual product she works on, isn't worthy of a mention. At 23 how much product management knowledge or skill can you really have, or heck any form of management skill? Traditionally, managers are meant to be people who have done the work of the people they're managing so they can make informed decisions. Given the widespread awareness that tech firms do 'diversity hiring' all the time it leads directly to the suspicion that maybe she was hired because she's a cute 23 year old girl and not, say, because of her extensive experience of product design or committed work ethic. Firms like FB used to have very strict hiring standards, but look at the employee growth in the past few years and tell us that this can still be true. Someone like that would simply never have made it through the interviews 10 years ago. They are clearly a bullshitter, look at this:
https://www.linkedin.com/feed/update/urn:li:activity:6968330...
"Prior to working at Meta (priorly Facebook), I built 3 startups and I put 2 out of the 3 startups through the UCLA Summer Accelerator program. This accelerator is founded by my good friend and mentor, Robert Jadon and accelerated my growth as an entrepreneur and woman in tech."
And:
https://www.linkedin.com/feed/update/urn:li:activity:6988514...
"During her senior year at UCLA, Riley Rojas decided to pursue a career in Big Tech — and she wanted to work for the best ... This week in #KeepingtheBalance, Rojas shares how she landed her job at Meta with a political science background. Spoiler: It took a whole lot of studying and manifestation."
So of course that will lead to resentment. She studied political science yet claims to have made three startups before she even graduated? The pay for these jobs is famously good. What possible value can this person be delivering to meta?
I'm not going to read too much into your complaints about her priorities; but suffice to say, perhaps consider that she doesn't mention the details of her work because being a PM is generally breathtakingly dull.
> Traditionally, managers are meant to be people who have done the work of the people they're managing so they can make informed decisions. Given the widespread awareness that tech firms do 'diversity hiring' all the time it leads directly to the suspicion that maybe she was hired because she's a cute 23 year old girl and not, say, because of her extensive experience of product design or committed work ethic.
And yet you then sought out her linkedin and found evidence that she has, indeed, quantifiable and valid experience. But of course, you dismiss it out of hand because she's "clearly a bullshitter". But is she, really?
I've been out of school for ~20y, and even back then I knew at least five people who had successful business ventures during their tenure at post-secondary. At least two of those companies exited in rather substantial acquisitions. There was also the people who would go on to speak at TedX, who were featured on magazine covers, who...
Post-secondary is already a sample of the top-tier students that there is available, it shouldn't be surprising that some of them are super achievers.
I could never pass a FAANG interview, or get into UCLA, or run a startup. She’s clearly extremely talented.
Let's be honest - all anyone really has against this person is they don’t like that a conventionally attractive confident young woman with a social life and goals is doing better than they are. Good for her - I hope she keeps making them angry.
It's amazing anyone is taking her LinkedIn postings seriously. Making a startup is a LOT of work. People who are famous for doing that in college are mostly also famous for dropping out because they can't do both a company and their course at once. She's claiming she did that three times whilst studying nothing more specific than political science, and then decided none of them were worth pursuing, but instead the pinnacle of ambition was low level PM at Meta? She's using the word "startup" here to trigger progressive ideologies in recruiters, not to indicate an actual serious effort to build a firm.
I suspect you and dleslie are very lucky to not have encountered these sorts of #womenintech before (the hashtag is important here). The sort of people who describe themselves that way invariably have absolutely no interest in tech, let alone in founding companies - unless they get to be a #femalecofounder, which helps unlock more VC money for the male actual founder. These people get jobs by loudly deploying feminist ideology at any possible opportunity and will typically be found on panel discussions about #womenintech complaining that men don't take them seriously enough, invariably blamed on sexism and not, say, their lack of any interest in or knowledge of tech. They certainly will not be found enthusing about a new product idea they had or banging out code at 3am.
"all anyone really has against this person is they don’t like that a conventionally attractive confident young woman with a social life and goals is doing better than they are."
Lol, no. This is HN, a lot of us here have worked for big tech firms in much better paid roles, including me. Junior PM at a company the size of modern day Meta is nothing special. The reason we criticize her video is exactly because of that experience - because we know that such firms increasingly bloated up over time with people who were there for ideological reasons and not because they contributed anything to the team. Another poster called them "plant pots" which sounds about right. They contribute either nothing (best case) or strongly negative value (worst case) and for those of us who have had to deal with them it wasn't a pleasant experience at all. If you never did, be glad!
That really depends on many factors, like whether you've taken on VC funding.
Several of the student business ventures that I'm aware of among my own peers had founders that continued to finish their undergraduate. Some took funding, others did not; all had employees and clients, so they weren't paper tigers.
You really haven't shown a good reason why she shouldn't be believed.
> and will typically be found on panel discussions about #womenintech complaining that men don't take them seriously enough, invariably blamed on sexism and not, say, their lack of any interest in or knowledge of tech.
I suspect the irony is lost on you that you are stating this while arguing that she should not be taken seriously.
> Junior PM at a company the size of modern day Meta is nothing special.
In which case, her stated experience is more than adequate.
Fundamentally, neither of us know her and we're coming from very different places so there's no way to resolve the disagreement. You're taking everything she says at face value with the maximally generous interpretation possible. The video went viral because most people aren't willing to do that. Instead they're applying their priors based on experience with similar people. 23 year old TikTok influencer types who like to post clips of their easy life have a very high correlation with people who aren't entirely honest, and the #womenintech hashtag combined with humanities backgrounds has a very high correlation with women who don't care about tech at all beyond it being a gateway to an easy life. The video does nothing to dispel that impression and absolutely everything to reinforce it. It doesn't help that the PM title can mean anything from a Steve Jobs to a glorified meeting note taker.
But sure, if you want to believe that there's nothing wrong with that video and it says nothing about decadence at Meta then by all means, go ahead. Makes no difference either way. Others will draw their own conclusions.
She should be taken seriously because many people erroneously believe that can't be true.
I've worked in tech for decades, and this doubt you express about a fairly typical-behaving young woman is not unfamiliar to me; and it's rarely proven valid, among my peers. Rather, it's almost always an expression of the jealous misogyny of the complainant.
_Every_ attractive woman I've known in this industry has had to suffer endless doubt about their abilities, beyond what I consider normal.
The widespread scepticism you see isn't woman hating. It's directly created by people like you, who make blind deference of women an ideological imperative. Your defence of this girl is not any evidence of real technical skill or effort but that she's "pro-social". And then you claim - again without evidence - that anyone who points out the obvious (that she doesn't seem to be working very hard) must be motivated by generic sexist hatred. It's an absurd and deeply offensive slur that you can't recognize as such only because the left engages in it so often.
You're also conflating using tiktok with being passionate about tech, another switcheroo.
It's that exact attitude that leads to a decadent culture in which work and skill are devalued, people being hired because of their gender or ideology, and a large population of people who notice that. By the way, I've worked with women who are actually passionate about technology. They hate this stuff too, exactly because it devalues their own work and career. You aren't helping women with this sort of thing, you're hurting them.
Absolutely it is. However there's no evidence that she is at all.
> Hell, she's expressing herself using the technology platform most popular with her generation.
That's an interesting take. Most people would say the _social media_ platform most popular. I know a lot of people who use social media extensively, and it doesn't appear to correlate with a passion for tech. Does your experience differ?
Whilst I don't disagree that sometimes this view is a jealous misogynistic one, I disagree with "almost always". I suspect you've seen the behaviour enough though that you're expecting it and looking for it.
This women having no identifiable technical skillset is a fair reason to question her. It would also be in a man. If you can indicate otherwise (rather than just hand wavey "this is misogyny"), I an very open to being proven wrong.
That's why all of these big tech TikTok videos only show cafes.
You saw this kind of thing at investment banks pre-08, people who did literally nothing, created no revenue, they were just a $200k/year plant pot, left the industry in 08 and never came back.
From what I have seen, the situation in tech is worse...I am not even in the US, and have interviewed at places where cost is obviously out of control but they hired this guy with a CS degree who has literally no idea how to run a business (one place I interviewed at, the unit built the front-end for a savings product, iirc they had five sprint teams, each team had 3 business analysts, 1 PM, 1 test dev, 2 devs...it was madness, and the guy interviewing me was maybe 30, no business experience, had worked as a "senior dev" at Wipro or some other consultancy place, this guy couldn't even get people back into the office, no-one would go).
I think people have been in the machine so long they forget what reality is. Reality is here now, everyone is getting fired, the free money machine has been turned off.
What does this have to do with anything else you brought up?
Most programmers I know would sooner quit than return to the office; that doesn't mean they aren't productive.
My point is: the guy has no management experience, and is unable to lead his team. That is why he is running a bloated mess that will get everyone fired.
She was sharing it on TikTok, that's the problem. If Meta product people have already stopped eating their own dog-food then something is very amiss.
Focus on how to build others up and make that the norm instead.
fine? I don't get the hubub
I'm not being sarcastic, that's just my guess on why it bothers people.
Nothing new on the internet.
People even take entire movies and mix clips around to change the storyline entirely.
https://twitter.com/coldhealing/status/1561022408206729216
A lot of the lavish perks they’ve showed have been part of these companies since these two young women were toddlers. It’s privilege discourse meeting the cringey nature of TikTok.
Personally, I think the answer is "twitter is popular because it isn't monetized, when it gets monetized it won't be popular".
Rewind a few years and people were calling for antitrust actions against Facebook for their market dominance. Some still are. This never concerned me and I needed no better evidence than Instagram. Instagram popped up out of nowhere and was an existential threat to Facebook with 13 employees when Facebook bought them for $1 billion.
If in the space of a few years something can appear and threaten your very existence then you aren't as dominant as people were making out. If it happened once, it will happen again. And it has: a lot of particularly younger people (a key demographic) use Snap. And you can't ignore Tiktok, which is rapidly eating Facebook's attention economy.
The big problem for Facebook (sorry, "Meta") is they have no plan for the future. Oh, sorry, there's the Metaverse. That ain't it. There is absolutely no evidence that VR will ever be anything more than a niche. There's the argument that this will eventually lead to AR but once AR becomes viable (if it ever does) then Meta will be in the same competitive boat as many others because a VR headstart is no headstart at all.
So how long can Meta milk the advertising teat before drastic change is company strategy is called for? I'd say that's coming sooner rather than later.
> We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year.
Yikes.
Not sure why anybody is expecting it to be profitable at this stage in its lifecycle.
They simply are burning way too much money for an R&D phase.
Are they building giant factories or something?
But to put things in perspective, the entire R&D budget for the first iPhone was $250M, and I don't think it was highly optimized for cost.
10B is 40x higher. And this is an average year, for an unfinished product that did not even start from scratch (they started with the Occulus Rift, a pretty advanced prototype)
= low budget + passionate people + toxic environment to work in longterm
OR
= high budget + leetcoders + cushy working environment
I don't think it's fair to compare Meta against companies like Apple when they have up until now been almost entirely a software company.
I mean they're still making money. Mark doesn't give a shit about short term stock movement, why would he care about the division that he believes is the future of the company and maybe society losing money?
And I can't help but reflect back to 1987 when AAPL was 27 cents a share and Jobs (at NeXT) was expressing his concern for the massive (a million a month!) cash burn rate at NeXT.
> We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year.
Interesting.
Literally every piece of technology you are using right now followed this model. Spend lots of money over many decades until the technology is developed enough to be valuable. Hell, VR is a technology that the federal government spent lots of money over multiple decades in research labs until they finally turned it over to the private sector.
VR has been in development since the 1960s when Ivan Sutherland put his brilliant hands on it. Look up The Sword of Damocles.
That's right folks, you are playing Beat Saber because the government spend 50 years developing the technology and components that scrapy startups were able to use to develop private VR headsets.
Now Meta has enough cash to act like a small government because it has monopoly status. Kind of like how AT&T was expected to do heavy R&D for the privileged of being a monopoly. Where Bell Labs developed the transistor. Keep in mind, the transistor at the time was so expensive that the only customer was the government.
So as long as Meta keeps being a monopoly, they will be expected to keep doing a lot of R&D.
I know there are external macro issues - but fundamentally you have to choose between two interpretations of this data.
1 - They've blown it badly over the last 7 year (strategically, but also at an execution level). And it's all been covered up by a bull market and cheap capital. 2 - But the metaverse!
> FREE CASH FLOW
>
> 3MO 2022 3MO 2021 9MO 2022 9MO 2021
>
> $ 173 $ 9,547 $ 13,151 $ 25,876
But yeah, it's down bigly. So is their net income.
Q1 was 8,528
and 9 months ago it was 13,151
Now its 173.
Approximately 4,000 per quarter for the past 3 quarters..... Pretty crazy.
The way I see it is:
- From Jul - Sep 2022, the net cash provided by operating activities minus their purchases left them with $173M.
- From Jan - Sep 2022, the net cash provided by operating activities minus their purchases left them with $13,151M.
So yes, this quarter wasn't great as they only had $173M cash leftover. But their previous two quarters were good enough to leave them with $13,151M - $173M = $12,978M free cash flow.
It's just that in Q3 they only produced $173M free cash flow. They still have $13,151M free cash flow produced since Jan 2022.
Yikes!
And yes costs are up but they are having to do hardware R&D that they have never done before.
Yeah, but flat isn't much better.
I’ve thought for a couple years now Zoom would make an interesting target for them- a huge built-in enterprise audience, one of the last remaining independent video conferencing companies with (imo) best of breed engineering and product and now beaten down valuation and meetings are the main focus area for VR right now.
Metaverse just feels like it’s trying to be a “premium” version of reality, that comes at a premium. Seems like such a small target audience to spend so much money on, when across the spectrum of people I know, would rather meet up IRL, or go disconnect from technology..
Some of the tech is neat, and probably innovative, but think no one is as hyped about this as zuck. Also no one likes zuck.
Oh wow, that was misguided. Other companies have been slowing down hiring significantly (especially after the war started in February). I don't see how they'd get out of this without layoffs (which is generally bad for the whole industry).
Mark Zuckerberg has a $10 billion plan to make it impossible for remote workers to hide from their bosses [1]
China believes mass surveillance will help it engineer the perfect society [2]
There's no sex in the Metaverse champagne room
[1] https://fortune.com/2022/10/18/mark-zuckerberg-meta-avatars-...
[2] https://www.codastory.com/authoritarian-tech/china-surveilla...
LOL - love it ;)
Sex sells but it doesn't pay the bills. i.e. you can't be coding Zuck's metaverse while having sex.
I'm a fan of VR too. But the metaverse is either going to be the most amazing thing or the most dystopian thing that humankind has ever created.
Some other process will create the amazing virtual universe. I'm hoping for a grassroots open source virtual universe will arise in much the same process as the early internet.
I imagine there are an equal number of people that could convince him to continue, in case he is right. This appears to include Apple: https://9to5mac.com/2021/11/25/kuo-apple-plans-to-replace-th...
I think the negative feelings towards all of this will flip, if Apple decides to release something.
15 years ago when someone introduced me to FB I called it FarceBook.