I don't think the parent is making a strong claim in this direction, moreso that Facebook/Meta has very few new innovations and prefers to acquire them.
Other companies are also quite profitable or have strong market caps but are also not innovating and prefer to acquire new innovations (Oracle being a prime example).
This isn't unique to facebook/Meta though: plenty of companies switch more toward the acquisition of innovation than the creation of it. Microsoft was like this for a long time. Apple, Google, and Amazon have also made their fair share of acquisitions over the years.
Introducing new products/value propositions is hard, even in adjacent markets, and most will fail. It's often easier to acquire something instead once you reach the point where you can afford to do so.
There's a larger question that I'm still trying to work out.
Meta has something like 71K employees at this point and spends over $21B a year in research and development.
They don't give head counts for how many personnel are performing R&D work, but if you assume that most of their R&D costs go to employee salaries and that the mean salary at Meta is around 500K, it looks like at least half of their workforce is engaged in R&D.
What are they getting for this investment? Instagram, WhatsApp, and Oculus were all acquisitions. Facebook Messenger came out in 2008.
I get that some of them are working to optimize their advertising revenue stream. Does this require 20-30K+ highly qualified engineers and support FTEs?
Something else is going on. My guess is that it's a form of Parkinson's Law, only with IT engineers instead of British civil servants.
Don't get me wrong. There's a lot of innovation going on at Facebook. That's guaranteed to happen when you have as much talent as they do.
Why isn't it translating over to their core business? Why do they have to continue to acquire companies (e.g., Oculus) to have potential areas for growth?
It doesn't make any sense. They would have more significantly success if they simply took half of their engineers, organized them into teams of 3-4 people, and gave each team $1-2M in startup capital VC style. Let's say they can create 2.5K teams. This would cost them $2.5B - $5B, or about than one tenth of what they spent last year in stock repurchases.
So, yeah, I have FB on my list of innovators.
These companies have one cash cow business, and they want to hire the best people they can to keep the lights on. These people tend to go around selling their skills to other places who want the same.
That's pretty much all there is to it. Innovation isn't even the goal of middle management in any large people operation. If anything its the opposite, no body wants disruption in established order of things.
Meta prints money. They brought in $40B in net income off of $115B in revenue last year. Income attributable to Facebook + WhatsApp + Instagram doubled from 2019 to 2021. They spend more on research and development than they do on expenses attributable to their core business.
Yes, they're no longer growing. That was going to happen eventually. Yes, they're going to be targeted by extensive regulatory action. Yes, they're losing space - and users - to competitors.
It's going to take a lot to kill them off. The social media scene changes fast and they're going into decline, but it doesn't change the fact that Meta is an extremely large advertising company with a lot of money and talent. This isn't MySpace 2.0.
A $380B market valuation was likely unreasonable. A $200B market valuation for a company that earns $40B a year and is used by more than a third of the global population sounds very reasonable.