Meta and the Metaverse. Will Zuck have the last laugh?

[El Presidente]

What is going on with Meta is riveting stuff for the economic and IT nerds among us. 

Take one egomaniac  (we will do Twitter another day ), a compliant toothless board, control of voting shares, Billions of dollars worth of cash and off you go on spending spree developing an internet world of integrated virtual reality. 

Apple stuck the boot in with their "opt in" advertising option earlier this year. 84% of Apple users decided to opt out and Facebook/Google were the primary losers. 

Shares are way down. The cap multiple on earnings is an 8 which is what you would expect from a mature business as opposed to a tech monolith. Something is being discounted and you would think it is the head. 

Rule Zuck out? You can't. The business is the closest thing to a cash tree the world has seen but the game (online advertising) is changing as Tic Tok looms large.

Do you see the Metaverse becoming what Zuck envisions?

Would you be backing Zuck now? Will he have the last laugh?  

[gustavehenne]

Thankfully I don't hold any shares in Meta due to the corporate governance issues you lay out above. I see augmented reality being the next big thing and whilst virtual reality may (or may not) be the next big thing thereafter (anyone remember Second Life?!?), I struggle to see how it will generate revenues to match anything close to what Meta is ploughing in to it.

I'd love to see and hear the detailed business case and what value VR will truly bring. I totally get the AR journey and what that could bring en-masse to the world but I think that Zuck is betting on a horse that is running in 2035, not 2022.

[BettyHumpder]

usually young people drive changes in tech/social media. they are more creative, willing to engage with new things. we didn’t want Google Glass when it came out. young people don’t want to live in the sims 3 graphics of the metaverse or whatever this caeser-cut dude is hawking.   

[BrightonCorgi]

VR and Metaverse are inevitable.  Who the pioneer of this technology is too soon to call.  Remember how crude wireless internet was 20 years ago?  Internet on a cell phone was a joke...

He very well have the last laugh.  I plan to buy a few shares at some point.  I hate Facebook, but if Meta becomes the norm, maybe I'll get a new watch out of it...

[El Presidente]

28 minutes ago, BrightonCorgi said:

VR and Metaverse are inevitable. 

For the dinosaurs....and I am no doubt one. ......explain in laymans terms the day to day commercial advantages? 

I am not being disingenuous. Just trying to understand the "leap forward".  I suspect this is also Zucks issue  in moving a story/vision  to the populace/market (at this point.). 

 

[TMan1]

I believe it’s still in its infancy stages. The Oculus headsets can be looked at as beta format (that just happened to generate revenue in this case). 
 

As far as uses? Virtual offices seem to be a draw for some reason that I don’t get. Who wants to sit at home with that dumb headset on all the time! 😀 

[BrightonCorgi]

32 minutes ago, El Presidente said:

For the dinosaurs....and I am no doubt one. ......explain in laymans terms the day to day commercial advantages? 

I am not being disingenuous. Just trying to understand the "leap forward".  I suspect this is also Zucks issue  in moving a story/vision  to the populace/market (at this point.). 

 

I don't know?  Just like that guy who sold books online?  How big could that get?

[Lamboinee]

Zuck counts meta stacks of cash every night, so he's already won in my book. VR is the future, but the current product is still a long long way from being something that will change the way we think, work, play and interact. I think the "software"  requirements already exist and are capable of attracting users and providing an appealing, functional, and beneficial meta experience. However, the hardware and user interface is no where near the level needed for vr/meta to be a paradigm shifting product. I own an occulus (so I'm an expert duh), and I play beat saber till my socks are ringing wet with sweat (about 16 seconds on hard levels). I also use it for e-sports, gaming, and have tinkered with office applications. It is too cumbersome for most consumer applications imo. In contrast, the most advanced/complex "vr" related applications I have seen and experienced incorporate some awesome UI interfaces and control mechanisms. I'm thinking of one in particular that basically amounts to a version of the technology used in the movie Minority Report. However, those systems are so expensive and so complex that I believe it will be quite some time before they have an impact on anything close to the average consumer experience. Further, although those systems are incredibly useful and effective, the benefits added by the technology for the  "work" being done seem to be limited. Do super scientists benefit from being able to do vr modeling? Absolutely. Does the vr technology actually add to the ease of completing the work being done and the knowledge gained in super hi tech arenas - as opposed to just being a new and fancy way of showing off another cutting edge,and perhaps more cumbersome, way of doing work? Yes. But, it's usefulness and desirability in this sense do not translate to people like me who use ms office and beat saber more often than we use genetic modeling applications. I was not impressed with my results when I tinkered with using the Oculus for virtual work collaboration or incorporating it into my daily work flow. I believe the problems/issues I experienced require more than just a faster/better oculus headset. These weren't issues that I felt could be addressed by the next or next next generations of cell phones strapped to my head. Rather they were problems that can only be addressed with significant steps forward and tech that, I feel, is pretty far away. Think 8k organic vegan contact lenses grafted into our eye holes. (Computers merging with organs is actually where I think the next big steps will be made) Also, we have to figure in the learning curve and rate of adoption. My industry is plagued with "people" (term used loosely) who pay employees to print out every dam email from their pager so that they can be read and replied to via dictation (which then has to be typed by that same employee). Admittedly, my industry is one of the worst as far ludites. But, I still don't see how many segments of the population could adapt even if the tech was available. Imagine, if you will, 12 people in their 50s or 60s or even 30s roaming around the house on a zoom call while calling out "I can see you, but can you hear me? Hello? I am not a cat." It's hard enough to get some people, who should know better, to unmute their dam microphone. Best case scenario, vr meta Nintendo vr valve whatever technology will not really start to hit the virtual inflection point until it can enhance pornography consumption without blocking the sightlines of teenagers praying their mothers don't walk in on them between meals of hot pockets. When the pornhub vr category gets more hits than the other categories..... The Vr meta takeover will really be underway. 

 

3 hours ago, El Presidente said:

explain in laymans terms the day to day commercial advantages

Virtually sifting through 1000 open internet tabs of cigar forum posts, auction postings, and weather-by-the-hour, while not having to look at anyone in real life or let them see that you are actually a fat dad bod person and not a blue beautiful avatar.  And....beat saber.  I honestly enjoy beat saber and some of the fitness vr apps. Any "normal people" commercial advantages are far far away imo. We'll all run out of potable water and revolt before then. 

[PuroDiario]

It’s not so much about the core business  (other than the fact that is being beaten down to death as part of the demonized by mainstream media - arguably under the right principles on top Of governance) although certainly lower pricing power on ad inventory due to higher competition Cross platform and content forms (impressions continue to grow but these are lower price bc Lower value demographic as in its highest engagement distribution it’s losing Net adds to competitors), lower general engagement (though far too exaggerated by the news - Instagram still >1.2bn DAUs opening the app 1.4x per day with >30s average per session - which compares extremely well across and WhatsApp…well it’s one of top global platforms by penetration and engagement but is under monetized).

It’s more about the yearly spend which is absolutely huge (both on fixed and variable opex) but also on capital spend across fixed assets and software development (look at the cashflow) and the fact that there is no visibility of payoff and payback horizon to this major spend in a macro context where as an investor you can buy leveraged corporate loans of high quality issuers yielding 11% + with short duration (unlevered return) and risk free rate ks approaching 5% for treasuries. 
 

so meta is a mature incumbent facing pricing competition. While they have major option value in WhatsApp commerce and corporate adjacencies (read through LatAm and India applications for example) and Insta continues to be dominant western world social app - they continue to play catch up in fits and roll out of new functionalities. 
 

so overall a mature business in a situation like this would generally say ok time to spit out cash flow and find sensible internal reinvestment opportunities above cost of capital. Similarly, an incumbent in this scenario would be going out and actively pursue strategic M&A in size (this not an option for Meta as it is the low hanging fruit for regulators and they clearly prevent that from happening). So instead; they are spending crazy amounts of money, talking billions per year in a highly risky bet such mass market across consumer and corporate adoption of VR and so called metaverse. And spending less than needed unsuccessfully in social commerce, creator monetization and defensive/offensive M&A (and when they do usually late and not strategic enough) and the avenues to mitigate it such monetizing fully whatsapp are tough and regulation intensive and generally being rolled out in emerging markets with non-dollarized cash flows and lower ad-budgets. 

 

so risk adjusted it has become a tough proposition to most money managers…and that is further exacerbated in retail land by governance, media rethoric, price competition in cash cow advertising was, etc.). When google or Amazon or apple where under pressure they were investing in infrastructure assets (data centers, subsea fiber, cloud computing, content distribution (remember when YouTube was crybaby for investors in google or apple was at 90 and Icahn forced them to pay dividends and buyback shares?) which had a clear payback period and IRR to investors. Who can underwrite double digit billions of dollars of spending with a return in an unproven category with clear use cases but niche so far, and uncertain probability adjusted upside via mass adoption even more so when it is highly dependent on hardware? 
 

People are seeing it no more as a value stock with real options but more of a fully priced stock with a flawed capital allocation strategy. 

[Notsocleaver]

Billionaires pissing away money on long shot ideas is certainly one way to incubate innovation. Seems like its either that or have the military fund it. FB as a platform has gone from bad to awful in the past couple months, they just laid off a mate from high school and Zuck hasn't exactly been a great neighbor over on Kauai, so his failure won't have me shed a tear, but I respect him for shooting his shot.

[Fuzz AI]

7 hours ago, Lamboinee said:

Virtually sifting through 1000 open internet tabs of cigar forum posts, auction postings, and weather-by-the-hour, while not having to look at anyone in real life or let them see that you are actually a fat dad bod person and not a blue beautiful avatar.  And....beat saber.  I honestly enjoy beat saber and some of the fitness vr apps.

Hey! Stop describing my life!

[Lamboinee]

3 hours ago, Fuzz said:

Hey! Stop describing my life!

Stop plagiarizing my autobiography! I thought I'd be the only anxiety ridden tab sifter with dad bod. lol

[jakebarnes]

I think Zuck may have to get his software updated to be able to laugh. Took long enough to program him to blink occasionally.

[DaBoot]

Technology moves fast.. as far as commercial revenue… two words.. only fans.

if you build an alternative world, the sheep will flock to it.

[dshot]

I feel like this is those f*ck around and find out graphs. Mark Z. is F*cking around and just find out what it means when you have no real product yet that has no demand. Layoff's. In one graph they are projected to spend as much money on VR R&D as the Apollo space missions combined. It sounds like a bloated spruce goose to me. Maybe it will get off the ground, but who really needs it, no one. If it was up to me I'd make his horrible ad platform run better with that R&D money.

[BrightonCorgi]

Just as this thread is active, I just saw a Meta commercial on TV that explains the benefits of Metaverse for the real world.  Perfect timing for them. 

[Fuzz AI]

9 hours ago, Lamboinee said:

Stop plagiarizing my autobiography! I thought I'd be the only anxiety ridden tab sifter with dad bod. lol

Right now, I have 9 windows of Firefox open, with anywhere between 1 to 300 tabs open in each window.... and I've also got Chrome open with another 100 tabs, because Firefox kept crashing.

[Lamboinee]

2 hours ago, Fuzz said:

Right now, I have 9 windows of Firefox open, with anywhere between 1 to 300 tabs open in each window.... and I've also got Chrome open with another 100 tabs, because Firefox kept crashing.

First...what's a "window"...I just go with an "open concept" where all 300 tabs are strung together in one long banner tab. I call it...infini-tab.  I'll have the whole internet open at the same time one day. Luckily I have 3 CRT monitors so I can still keep an eye on my graphic equalizer add-on for VLC while tracking hourly underwater weather reports and tapping out some phat beats on fruity loops. 

Second, but would circumstance tab-maximus be any better if you were able to shrink your monitors and glue them inside a ski mask strapped to your head in a way that totally ruins your hair-doo (or scuff your scalp if bald) before your next zoom meeting and which precludes meaningful access to things like a pen for quick notes or the phone for not answering calls?  I tried it and failed. I went full minority report and I got a red ball. My nest cam has a recording of me testing this scenario with my occulus linked to all the rtx glory i could muster.  I discovered I cannot touch-type if I cannot find the keyboard and also that multi tabs are superior to swipey floaty jank-trash occuwindow things. But, i-racing and beat saber were pretty fun.

[BettyHumpder]

4 hours ago, BoliDan said:

Aaaaannnnnnddd, Zucks just laid off 11,000 meta employees.

 

CNBC: Meta laying off more than 11,000 employees: Read Zuckerberg's letter announcing the cuts.
https://www.cnbc.com/2022/11/09/meta-to-lay-off-more-than-11000-thousand-employees.html

 

i saw this while scrolling at work today and immediately thought of this thread 😄

[Fuzz AI]

1 hour ago, Lamboinee said:

First...what's a "window"...I just go with an "open concept" where all 300 tabs are strung together in one long banner tab. I call it...infini-tab.  I'll have the whole internet open at the same time one day. Luckily I have 3 CRT monitors so I can still keep an eye on my graphic equalizer add-on for VLC while tracking hourly underwater weather reports and tapping out some phat beats on fruity loops. 

Second, but would circumstance tab-maximus be any better if you were able to shrink your monitors and glue them inside a ski mask strapped to your head in a way that totally ruins your hair-doo (or scuff your scalp if bald) before your next zoom meeting and which precludes meaningful access to things like a pen for quick notes or the phone for not answering calls?  I tried it and failed. I went full minority report and I got a red ball. My nest cam has a recording of me testing this scenario with my occulus linked to all the rtx glory i could muster.  I discovered I cannot touch-type if I cannot find the keyboard and also that multi tabs are superior to swipey floaty jank-trash occuwindow things. But, i-racing and beat saber were pretty fun.

What is wrong with you?

One monitor, keyboard and mouse. Anything else is a distraction from the 1000 open tabs.