+ Recession causes Facebook's primary ad customers to slash advertising spending to save money.

Facebook's revenue could cut in half and they could easily make more profit than they did this quarter just by getting rid of reality labs. The only thing holding the stock back at this point is Mark and I guess the fear that no one will use facebook 20 years from now.

Getting rid of reality labs, then what? Be a sitting duck and getting attacked by Tiktok/Apple left and right? They have basically no moat now.

VR is prob. the only thing that remotely looks promising for META now.

Facebook still has 3 billion daily users. For all the doom and gloom it’s doing fine. Yes it’ll probably slowly fade into history but that will take decades.

That doesn’t make for a compelling buy signal. In principle, you should buy a stock because you believe you will be repaid in dividends over time. If the ship is sinking, even slowly, those dividends are not terribly appealing.

By the end of the decade people will feel about Facebook the way they feel about Game of Thrones.

Vaguely remember when it was a big deal, but not why.

This undervalues Facebook's social network moat, which is honestly what they should be leaning into: a more interactive Yellow Pages / local groups directory.

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.

There's no moat.

Inertia isn't a moat.

Source: I've re-spanned my social graph several times since Usenet.

It's fine. People aren't corporations.

By that logic, Google has even less of a moat? I mean, anyone with money can just make a decent search engine.

How do you reckon that? Back of the envelope, their profit in your scenario should be about (revenue - COGS) / 2 - (fixed costs - fixed cost of reality labs)

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.

> TikTok continue to eat its lunch

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.

Just from seeing what people watch while on the train these days I'd say it is, I get that it's not the best indicator

Facebook seems to be 90% ads for me nowadays. There's only a few groups/people whose updates I'd like to see and the constant irrelevant click bait ads aren't worth the effort.

To be honest, I agreed with everything you said except it not being a strong argument.