I wonder what that makes TikTok then? Do we have any insight into how much ad cash Facebook + Instagram generate compared to TikTok?
https://www.statista.com/statistics/1305708/tiktok-ad-revenu...
Operating Loss At TikTok Parent ByteDance Topped $7 Billion Last Year, WSJ Reports [1]
[1] https://www.wsj.com/articles/tiktok-parent-bytedance-sees-lo...
https://news.ycombinator.com/item?id=33572187
Markets aren’t efficient. People are biased and can’t look past them.
There’s quite a bit of knowledge on HN. As a group, we could do much better understanding the markets.
The smarter the people, the bigger the ego and limited the vision.
Between ArsTechnica, HN and reddit and you can bet against popular opinions on this. You can also identify cult formation too.
HN != Financial advice
Systematic risks are still risks even if they don't manifest and if you want to argue Paul Graham is wrong you have to argue why the risks aren't risks.
(I don't know what risks he pointed out, so I don't know whether I think he's right or not)
when the tweet was made the universe was about to make a dice roll. There was a probability that bitcoin went down and a probability that bitcoin went to the current price, and the universe rolled and happened to land on the current state, but the others could also have happened if luck had gone another way?
Is that right?
If we're talking about the dice roll example, just because your rolled a six, it doesn't mean that rolling specifically a six wasn't more unlikely than rolling a number from 1 to 5. Which means that if you planned (either explicitly or implicitly) on things working out in a way equivalent to rolling a 6, then your plan was risky.
And even if we lived in a deterministic universe, we don't have perfect information, so we cannot know the outcome of big events. Our best way to deal with them is to model things probabilistically based on what we do know and make our choices based on based on risk/reward.
I'm also not sure where you're getting the phrase "tail risk", I didn't even know what the term meant much less used it.
I guess I can see some crazy combination of physical objects colliding and nobody being able to predict where they land, I'm just not sure thats the right model for valuation of an asset.
> tail risk
Sorry if I introduced that. I just meant that it's occurrence far outside of the regular distribution.
For example, Bitcoin is up, as are most investments. It’s unfortunately also correlated in the other direction with the stock market so if the market tanks next month so does Bitcoin. But the link doesn’t go away if the stock market is fine, so Bitcoin could also yank in 2 months when the market tanks, or in X months… aka the risk is from the correlation not the short term outcome.
As to predictions, the best evidence we have is the universe isn’t deterministic. Quantium mechanics has everything rolling dice. So saying X didn’t happen therefore X couldn’t have happened appears to be inconsistent with how reality actually operates.
> The point about systemic risks is they don’t go away just because they haven’t happened yet.
I agree. But observing a state of instability or unpredictability is different than saying "X economic event a 10% chance of happening".
>> Length of ownership AND relatedly original cost basis. I think a lot of stocks can seem to defy gravity (i.e. high PE and/or high P/FCF) when the founder and the early investors HODL stocks. At $0.0001 per share, HODLing (in say TSLA, META, MSFT, BTC) is easy since there is/was no upfront capital paid in and holding has essentially no cost basis - so there's no need to act like rationally like a later stage investor.
>> Founders and early investors can easily own up to 40-50% of the company and really its only when the founder retires/starts diversifying and the founder and early investors start to unload - does price discovery occur on the entirety of the shares outstanding.[1]
[1] Mark Zuckerberg Sold Facebook Stock Nearly Every Weekday Last Year For Almost 11 Months https://www.forbes.com/sites/rachelsandler/2022/01/06/mark-z...
Not really. The decision to not sell and to not buy is itself reflective of the price. If a stock is super cheap, people will buy. If the stock is priced fairly or overpriced, few people will buy. Same goes for selling.
People forget that stock buybacks also created a pool of equity for employee compensation, it isn't just about returning capital tax effectively.
But basing your expectations on 2021 would have done exactly that. So that argument is wrong.
If your real/amended argument is "no way to predict the level", as in predicting the exact amount, that's a much weaker argument that has barely any ramifications for investing. The specific amount is generally much less important than going over/under some threshold.
But it was obviously a plausible outcome.
Predicting it only took very simple and reasonable logic. "I bet the number stays the same."
A sports analogy: There's a game tomorrow where one team has 30% odds of winning. If someone bets on that team, nobody says "no one could have predicted that". It's obvious that it could happen, and it's plausible that it could happen. Tons of people predicted it.
And large quantities of the stock were purchased. There's tons of trading happening every day.
It's not like the people that expected a large buyback were acting in a vacuum. Stock value follows the average. To push the sports analogy, the team stock would still be going down even though many people are betting on them.
The only surprise with the buyback streak since last year is how poorly executed it was. They dumped $45B ahead of anouncing a decrease in DAU, then trickled after it tanked the stock.
It's cash returned to shareholders.
I think they are efficient most of the time, but there are edge cases that allow for higher risk-adjusted returns than predicted by a purely efficient framework. A notable example is Renaissance Technologies.
https://news.ycombinator.com/item?id=33573232
(Edit: I would have referred to the company as Meta, like you did, but “the Meta comment” could have been confusing, even with the capitalized letter.)
Markets: eventually efficient
> I was repeatedly trying to convince HN readers
There's not much point. Invest how you see fit and let others figure things out the hard way.
This is why it's really hard to win big buying individual stocks. You finally pulled the trigger, and you won, but you still never even had a chance to make more than a small gain.
Say you even bought $100k, which is probably much more than most mere mortals have the stomach to "place a bet" with. You'd be up 60k, which is great, but probably not life changing. And now you have to decide if you want to cash it out or let it ride and risk losing it.
On the other hand, it doesn't take much intestinal fortitude to park 100k in VTSAX and sleep well every night.
Depending on how much meta he actually bought, he may have made more money today with the s&p's 0.22% gain that he's made with meta all time.
But meta probably feels like the big winner.
But 5% is probably much more than anyone should allocate to a single stock.
And just to demonstrate my point, he could have bought 1 share of meta a couple months ago for $100. And he could have $1 million in his 401k.
With the exception of Apple?
I certainly hope that it wouldn't be, for the person who placed a $100k bet.
I'm trying very hard to not say 'I told them so'.
In fact, I said this before here [0] [1] [2] too many times to stop listening to the nonsense from the media. Meta has lots of cash to last for another decade and they are still printing money.
Such calls for the death of Meta Platforms on HN and in the media has once again always been greatly exaggerated.
[0] https://news.ycombinator.com/item?id=31832439
It's strange to me that people think Reality Labs is an incinerator. Truly, without exaggeration, I think this entire perception is based on the ridiculous early Horizon Worlds screenshots Mark Zuckerberg posted, which did a ton of damage to Meta.
But Horizon Worlds is not The Metaverse, and it's not Reality Labs! It's one part of it. Reality Labs has game studios, the leading VR/AR hardware, all kinds of software packages to make working in the Metaverse possible, like Horizon Workrooms, Horizon Remote Desktop, and quite a bit more. They are quickly developing a fairly insurmountable moat.
Meanwhile, Apple is also dumping billions into AR, but they don't break it out in earnings reports, so no one talks about it.
There are lots of execution risks in Meta's VR strategy. Obviously, if no one ever wants their products for games, work, entertainment, or whatever else, then they will have incinerated an awful lot of money. But I think that's actually the unlikely scenario.
The quarterly losses are very large, but it's an entirely new product line with a very large potential market.
> But I think that's actually the unlikely scenario.
Right, we take opposite sides of the probability here. My preference is just that they direct some of that prodigious cash-generator towards shareholders in the meantime. You know, like Apple does.
The screenshots you’re talking about are of Zuckerberg trying to gin up enthusiasm for the product.
The insurmountable most is surrounding a space that doesn’t make any money. Apple may be investing in AR but they didn’t signal that they are betting the company on it
It definitely isn't when you look at their research videos:
Historically their buyback has only compensated for employee equity comp, not much more. That probably changes a bit going forward
https://www.macrotrends.net/stocks/charts/META/meta-platform...
They were mostly flat in 2018-2020. They were down 4% in 2021 and 5% in 2022.
Looks like you're referencing YoY rates as measured on a quarterly basis from the link above, which is not the same as the absolute percentage of shares.
Likely the pace will rise somewhat with recent job cuts/buybacks, but historically they've mostly just tread water with shares issued via software based comp
That seems compatible with what I said (flat 2018-2020, down 4% in 2021 and 5% in 2022).
> Looks like you're referencing ...
https://s21.q4cdn.com/399680738/files/doc_financials/2020/ar...
As of December 31, 2020, there were 2,406 million shares of Class A common stock and 443 million shares of Class B common stock issued and outstanding.
As of December 31, 2021, there were 2,328 million shares of Class A common stock and 413 million shares of Class B common stock issued and outstanding.
We don't have the end of year figures yet but from the Q3 report:
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001326801/d3f3edd...
2,248,672,204 shares outstanding as of October 21, 2022
402,876,470 shares outstanding as of October 21, 2022
Class A shares [...] 2,262 million [...] outstanding, as of September 30, 2022
Class B shares [...] 403 million [...] outstanding, as of September 30, 2022
Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders (Three Months Ended December 31, 2022): Basic 2,638
Sep 30: 2665
Oct 21: 2652
Q4 average: 2638
Dec 31: ~2615 ?2614. Not bad!
8.2% fewer outstanding shares than two years ago. If that’s “mostly flat” so be it.
Mumbles something about perpetual FTDs, naked shorting, the biggest market maker also being a hedge fund (who donates many millions to corrupt politcians), tokenized securities that can be used as short locates and so on...
If you have any long form versions of this ranty comment, I’d be genuinely interested in reading it. Cheers
Citadel LLC (the hedge fund)
Both part of Citadel the mother ship. All owned by 1 man (who like Madoff owns a hedge fund and a market maker, but unlike Madoff actually seems to execute trades with his hedge fund).
1 man who also happens to be the top GOP donor (what could he possibly want in return?): https://www.cnbc.com/2022/10/07/citadels-ceo-ken-griffin-bec...
If you want more info, this is an OK start: https://youtu.be/26_IcexvePA
Kind of old, but still relevant (not much changed since then). The same documentary makers are working on a new one that I believe will come out this year. There's tons of info to find online if you Google any of those terms in my rant from the previous comment as well.
PS: those are just tips of multiple icebergs, there's more.
Yeah same for FTX /s
Better to just not see what the media is saying period than go full contrarian
I followed as NFLX dropped, and it was definitely a media narrative before the drop was over. We don't know where things will shake out, of course, but it's not the case that everything is priced in by the time the media starts talking about it.
Metaverse notwithstanding, Facebook and Instagram are still huge cash cows. Ad CPCs are really high, especially mobile ads. Companies, especially in financial services and healthcare, paying so much $ for clicks to target older people, retirees, etc. and also people with medical problems. Obesity epidemic means more healthcare spending, same for people living longer.