And from what I remember, many of the retention models also got screwed up (people weren’t quitting as often as before).

Was this because when people were allowed to work remote, fewer people quit to move to a different part of the country?

Poor performance is relative to what their peers (Alphabet/Apple/Amazon/Microsoft) were accomplishing for many years in the 2010s.

The market has separated these 5 pretty clearly now, with Meta trailing by quite a bit, Alphabet and Amazon in the middle, and Microsoft and Apple with a decent lead.

Meta is in the advertising business - why would we say they are they trailing Apple, Amazon and Microsoft?

I don't really understand why we are comparing a company who develops social media applications and generates advertising revenue against Apple who generates most of it's revenue from selling Hardware, or Microsoft who generates most of it's revenue from licencing software.

If we are saying that Meta are trailing Apple, we might as well say that Microsoft are trailing Saudi Aramco.

The market is not comparing their potentials now, but the market used to feel their potentials were similar in 2010s. Sorry for the terrible graph, it’s the quickest market cap with all of them except Microsoft on it that I found.

http://www.innovationkm.com/wp-content/uploads/2019/05/image...

http://www.innovationkm.com/the-market-cap-of-faang-changes-...

Another way to think of it is in the 2010s, a potential employee may have ranked a job at any of those companies as having similar security, but there is probably a different feeling about that now.

They aren't really in the same market though - so it's comparing apples and oranges.

I get comparing Meta against Google, but why would we compare Meta against Apple? They are fundamentally different businesses.

The market compared their potential during the 2010s, because everyone was growing by leaps and bounds and the sky was the limit. There is clearly no reason to do that now.

Plot the graph again but instead of comparing them to Apple and Netflix try comparing them to Johnson & Johnson and Porche.

As a follow on point to my other reply comment on review, the comparable stock on that list is Google - and the graph probably shows that the market actually underestimated Meta's 'potential' compared to Google.

2010 Meta 'Potential' vs 2010 Google 'Potential' - c$50bn vs c$200bn

2022 Meta 'Potential' vs 2022 Google 'Potential' - c580bn vs c$800bn

Meta grew >10x across the period, while Google grew c4x

I don't personally buy that Market Cap = Potential, but you would be twice as rich if you invested in Meta according to that graph than if you invested in Google, and you would have also done better investing in Meta across that period than Apple according to the graph you sent across.

You would have to take into account stock splits and dividends. According to DQDYJ total return calculator:

https://watch.dqydj.com/timeseries/stock-calculator/

From May 21, 2012 (when META went public) to now, here are the annual returns:

MSFT - 24.53%

AAPL - 22.99%

AMZN - 22.07%

GOOGL - 18.09%

META - 14.36%

It wasn’t me who originally used market cap as a proxy for potential…

Tech companies are valued by how they dominate particular sectors/niches and the potential growth of that sector/niche.

Facebook doesn't dominate social any more like it once did. It did so with Facebook itself then with instagram but TikTok is grabbing the current generation of new users.

It can't grow like it once did and usage of its existing services will gradually decline.

It's betting that the metaverse is the next social medium after TikTok's short form video. Personally I doubt that but that's the bet they're making.

Meta dominates the display ad market though, that is all they care about. Once TikTok is banned in America, they can grow it further.

TikTok isn't getting banned, don't be silly.

Is it silly? It's already being banned from US and European government devices. It is just one more sentence away from being banned for general population in those huge regions.

There is big chasm between banning an app from fleet devices and banning both an app and a website in an entire country. Especially one that is so enormously popular.

I cannot recall the last time I've seen such a bipartisan push for something so monumental. Just within the past week, Senators Josh Hawley (R-MO) and Mark Warner (D-VA) have been saying virtually the same thing: TikTok is an unprecedented national security threat.

they're literally just forcing them to build datacenters to keep the data for Americans in America (and Indians in India, etc). TikTok is already publicly hiring a ton of people for this

Once the data doesn't leave America this is going to go away.

This is not that much different than just complying with the type of regulations the EU has. The American version is just involving a lot more chest pounding and fluff because there's no existing laws to enforce to make them do this. So they just have to do it through threats and relatively minor policy changes (like banning on government phones).

I'm honestly more surprised that any social media apps were ever allowed on government devices.

Yes it is. The government is just trying to get the data to stay within the US. TikTok only needs facilities here (and maybe some sort of air gap) to comply.

Were US and European government officials/workers really big TikTok'ers to begin with?

TikTok got banned in India. I don't see why it can't get banned in US given CCP's complete control over Chinese companies

India regularly bans sites.

just last month https://www.npr.org/2023/02/14/1156726845/indian-tax-authori...

USA is different

Our state has passed SB 20. There are 4 days left in the current legislative session. The House had the 2nd reading of the bill today, and it is scheduled for passage on tomorrow's House Orders of the Day. Once it passes tomorrow, it goes to the governor.

https://apps.legislature.ky.gov/record/23rs/sb20.html

The current version bans TikTok on all state owned computer networks (this includes banning web access). This includes public libraries, schools and universities. There's a substitute pending that would exclude universities from the ban. There's no guarantee that this substitute will be part of what gets passed.

TikTok's highly unlikely to get banned, and if it was then 10 new replacements would pop up overnight. Facebook isn't anything like TikTok and likely never could be. Instagram might get close but even then its not the same thing.

Also the display ad market is only useful if you've got people to advertise to. The more Facebook continues to turn into 'social networking for boomers' the less and less they'll make.

They have 2.9bn monthly active users.

Like, I left FB five years ago (after staying there for 5 years), and literally HN has been telling me that FB were doomed for all of that time.

I totally agree that TikTok is a very strong competitor, unlike what they've seen before, but writing FB off right now is probably not the wisest long-term decision.

How many in the US, and how many with desirable advertiser demographics. Selling reverse mortgage and pharmaceutical ads to boomer audiences turns you into television, where--at some point--the audience is going to pass on and leave it behind.

A bit hyperbolic to say HN groupthink => "FB doomed". More like FB is over valued and their product has stagnated and alienated their user base.

Facebook acquires IG (over ten years ago now), HN comments: https://news.ycombinator.com/item?id=3817840

>and if it was then 10 new replacements would pop up overnight

https://www.youtube.com/shorts

already here

and not a chinese company

if Im gonna brainrot Ill use youtube

> Tech companies...

Is Meta really a tech company? It takes a lot of technology to do what they do, just like Netflix. But their core business isn't technology pre se, it's social media and advertising. I don't think they're the same class of businesses as Microsoft or Apple. Google is closer to Meta in terms of their revenue sources, but they have a much more diverse technology offering.

They are trying to become a hardware company with their VR line, but it feels more like a hobby in the Apple sense of the term. I.e., a division with small revenues and without a clear growth path.

So Google also isn't tech company. Their core business isn't tech but also advertising after all. Using your logic there are almost 0 pure tech companies.

You could indeed argue that. I think there's a difference between the product and the revenue. Google still feels like they produce a number of technical products, even if their revenue is mostly driven by ads. GCP, Android, and Chrome would be examples.

You are right. We never called movie studios or TV Channels "tech companies" even though all their work is distributed and created by technology.

Did movie studios and tv channels employ large departments of researchers and engineers that developed and deployed the technology?

I don't know.

Yes? It’s not common anymore due to the technology maturing, but on its heyday the TV channels were on the forefront of technology. See the development of color television and much more recently (and I’m most familiar with it), the digital TV standards.

Personally I'd say that if your company primarily builds its product(s) via programming then it's a tech company?

Attention just in itself has zero value. If companies are paying Facebook to advertise there, that is where the value is. Personally I think social media advertising is a pure scam industry, but so many small companies want to play that casino, and Facebook makes that easy for them.

> It can't grow like it once did

1 in 4 people on earth is using FB every day. They simply can't grow more too much.

This is the most fundamental problem. In order to justify a "tech" P/E multiple, it has to be the case that exponential growth in the future is justified. For any MAMA (Meta, Apple, Microsoft, Alphabet) company, this is almost certainly impossible. This means it is time to transition to being a boring, reliable stock, probably with a substantial dividend. I'm not sure Zuckerberg is ready to do that.

PE ratios for big tech.

Google: 20:1 Amazon: 100:1 Netflix: 30:1 Apple: 22:1 Meta: 18:1

(For the financially illiterate like me who wanted to see what various ratios looked like. Meta (Facebook at the time) used to have a 7:1 ratio when they printed money before they doubled headcount while revenue flagged. If it weren’t for that hiring spree, they would be under 10:1 and not in the same class of “tech” multiples.

They go full Musk and colonize Mars so that they can achieve the exponential growth that investors expect.

> It's betting that the metaverse is the next social medium

Apparently that's no longer the case: "Mark Zuckerberg Quietly Buries the Metaverse"[1]. Company name looks just silly at this point.

[1] https://news.ycombinator.com/item?id=35023493

It’s a public company that makes money. Why would it be valued differently than any other public company that makes money? Do people expect 10x growth?

Facebook’s ads business has been destroyed by Apple with the introduction of ATT. It’s pretty clear this is a permanent shift downward in revenue for them, unless advertisers like them are able to improve ads attribution.

Don't you think Bing's search revamp will also eat into the FB ad business? IMO, there is enough contextual info supplied by users during queries to better target users with injected ads than competitors.

IMHO these hirings and firings are not about the present but about the future. Sure, Meta did great but Nokia also did great for a while after iPhone was introduced.

What is the latest cool Meta product which promises a bright future for the company? Well, llama is cool but it's not product and today's greatest social media sensation is TikTok.

I'm sure meta does have some great tech, in fact some of the work they did on VR with all these tens of billions of dollars is groundbreaking but that also failed as a product.

Why would they keep the workforce configuration the same if their current state is probably not what they want to be tomorrow?

I get the feeling TikTok has played themselves. Their format is super addictive, and it works, but the problem is that with something super addictive people lose interest sooner.

It's not an actual drug so you can't just keep upping the dosage. I don't have the internal metrics and I'm sure they are still making gains, but I think their wave is going to be much smaller than Facebooks.

It's still very popular of course but just judging by the number of times phones have been shoved in my face to watch a tiktok at social events recently vs a year ago I have to feel their is some level of decline. I also notice that even the younger crowd isn't using it as much.

It seems to me that right now the most popular thing is sharing videos, both 3rd party and original within various group chats.

I think there is social media platform overload, and the best way to keep in touch with people that actually matter to you and be sure they see your content is having group chats where you share things and then talk about it. Just my anecdotal observation, I'm probably wrong.

It seems similar to the resurgence of piracy now that there are 50+ different streaming apps.

I don’t think TikTok is any more addictive than the rest. If anything, TikTok doesn’t make me feel missing out if I don’t constantly check the App.

I’m aware of the Chinese thing and how it makes some people feel but IMHO TikTok is healthy in in comparison with the Instagram or Reddit for example. You still can spend hours once in though.

After years of stagnation with Meta, TikTok is a step forward.

It's not about missing out but you get sucked in and there's no end. I don't use TikTok myself but I've gotten stuck with YouTube Shorts where 45 min easily fly by despite me disliking it. On all other social media platforms you reach the end and see content you read yesterday. On these video platforms it just goes on and on. Short videos are also a very digestable format.

I think this is good, it’s time we’ll spent. What I struggle with is the need to constantly check what’s new and never feel satisfied enough to move on.

I love taunting people by saying: "It's all just Vines"

> with something super addictive people lose interest sooner

Well, "addictive" literally means "cannot easily stop doing it"

Sure, but you can't really just do more. It's addictive nature plateaus rapidly. I guess you could get multiple phones, but not really. It's micro-addicting, but I'm a macro level it's less so. It's extremely hard to stop, but life necessitates you must at times and then it fades instead of compounding like a true addiction.

> What is the latest cool Meta product which promises a bright future for the company?

Hum... Did the executives of all those large companies just happen to discover they aren't innovative at the same time? Or are they trying to prop-up their stock so they have time to exit on the prices created by the low-interest market?

One of those is way more likely than the other.

(But yeah, those companies have stopped innovating long ago.)

The metric you choose matters. If you would have chosen EPS it tells a very different story, especially for investors.

Investors will tend to tolerate other faltering metrics for high revenue growth in startups, but that’s not Meta.

But EPS is doing great for Meta so I have no idea what you are talking about. Their only issue I can see for EPS is that they hired to many in 2020 and 2021, just as I said.

Tech is still valued as growth stocks compared to other sectors. If you look at the EPS, its trending down and growth is negative.[1] That's not "doing great" for what most investors expect out of a relatively mature tech stock that doesn’t pay a dividend. In other words, why would I pay growth-stock valuation for something that isn't growing its earnings?

(obviously, the analysis is more complicated than this, but you can see why investors may not think things are going gang-busters over at Meta)

[1] https://www.macrotrends.net/stocks/charts/META/meta-platform...

>Poor performance? Meta is doing great and just had one year of not insane growth.

Public sentiment is terrible and if that's a reliable leading indicator, the company will be in trouble if it doesnt continually diversify into products that distance themselves from the core brand.

I mean instagram and whatsapp are wildly popular

They are popular but anecdotally, if the general public is anything like me, they would be more likely to use those products if they werent owned by FB.

The general public does not really care one way or another about facebook the company

The conversations that I've been hearing point to the simplest way to kill TikTok: force them to sell to Facebook. As much as people dislike the spyware present in TikTok, they dislike FB's spying even more.

> Meta is doing great and just had one year of not insane growth.

This completely overlooks the changes that happened in that one year of not insane growth.

Apple cut Meta's legs off and Meta has no indication on how they're going to regrow them. The Metaverse is flopping, FB is seen as a place for hate, youths don't have accounts, etc, etc, etc.

Facebook is not the future of social media and Meta has not come up with a viable alternative.

It probably doesn't bode well that Cramer says Meta is ‘rapidly becoming my favorite stock’ :

https://www.cnbc.com/2023/03/14/club-meeting-recap-cramer-sa...