"Before I get to that, I want to briefly touch on our Q4 results, which I know Sheryl and Dave are going to go deeper on. I'm proud of the work our teams did here. We shipped products, our community continued to grow, and businesses of all sizes turned to us to help them reach people. But there are two things that I want to call out that are having an impact on our business.
The first is competition. People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly. And this is why our focus on Reels is so important over the long-term. As is our work to make sure our apps are the best services out there for young adults, which I spoke about on our last call.
The second area, and related to this, is that we're in the middle of a transition on our own services towards short-form video like Reels. So as more activity shifts towards this medium, we're replacing some time in News Feed and other higher monetizing surfaces. So as a result of both competition and this shift to short-form video as well as our focus on serving young adults over optimizing overall engagement, we're going to continue to see pressure on impression growth in the near term. Now I'm confident that leaning harder into these trends is the right short-term tradeoff to make in order to get long-term gains. We've made these types of transitions before with mobile feed and Stories, where we took on headwinds in the near-term to align with important trends over the long term. And while video has historically been slower to monetize, we believe that over time short-form video is going to monetize more like feed or Stories than like Watch – so I'm optimistic that we'll get to where we need to be with Reels too."
Honestly Facebook at this point is entirely unusable. My feed is full of shit I don’t want (and I block ads at DNS level so I can’t even imagine what it looks like for most people): Reels, half baked “memes” that are just really random thoughts from people I don’t know that someone I do know shared, and the rest I can’t even classify but it’s utter garbage. The only useful piece of FB was Marketplace but they managed to cram it so full of paid content and the rest is clearly online stores pretending to be local sellers that are this point I have zero use for that as well. I am sure they’ll continue to be printing money with their “generate outrage => show ads” core loop but how long will that actually last?
I don't log in to Facebook very often, but when I do it's not bad at all. I scroll through a few updates from friends and family and catch up with a few people, then I close it for another week or two.
There isn't just one "Facebook" that we all see, obviously. Your feed is going to be a reflection of the groups you've joined and the friends you keep (and haven't muted). If you've just accumulated groups and connections for a decade without doing anything to shape your feed, I could see how it wouldn't be very interesting.
But if you take a few seconds here and there to "like" things you want to see more of, hide things you want to see less of, mute the obnoxious people you don't want to hear from at all, and leave groups you're not interested in, it's not bad at all.
As a random aside, there is a Facebook ‘experiment’ (a/b test basically) that disables all ads for your account permanently. It was customary, for a while at least, to opt your user id (and that of a few friends) into that particular experiment on your last day of working at the company. Best leaving gift ever!
Then maybe a year ago they started focusing on non local/commercial sales and it rapidly degraded to the point where it's not worth using now. It seems like they have diverted all traffic to paid listings so my cheap yardsale-esque deals on stuff I'm trying to get rid of get no views (where a year ago I would get ten messages a day for the same item)
Regardless of how one might dislike it, the "generate outrage => show ads" thing has been working just peachy for Fox and friends. So my cynical take is that FB will continue to do just fine even as people shift to different consumption formats, and even if tiktok took over the world, because fundamentally, bored people will always exist and fads come and go.
There one or two days where you get the little ping in your brain to check the app (as an ex-smoker the sensation is not at all dissimilar to cravings), and after that you wonder why you spent time there in the first place. I can’t leave WhatsApp or Messenger because I have too many people I have on both, but that’s a different issue as far as I’m concerned.
Now I am spending some time on TikTok - but I’m get content from there that I actually generally enjoy, so that’s a net win as far as I’m concerned.
But sometimes I get stuck scrolling forever. Maybe that ad revenue is enough for them. I still go to FB for groups and business' pages.
Maybe A is a consequence of B?
If you don't let them track you, you get random advertising. And random advertising is painful to watch. I'm not advocating for targeted advertising, just stating a simple fact.
"We're getting beat by Tiktok and we're going to catch up by being more like tiktok"
That doesn't exactly exude confidence.
FB: formal private (or special interest, in Groups);
Insta: close private (or public if you are a verified content producer);
TikTok: still about building ad hoc network effects based on content alone.
Very minimally utilized in my social circle, I see maybe 1 suggested story per month, maybe click through 2-4 a year, watch 10 seconds of bland content by someone I haven't talked to in years, then close the tab wondering why I thought the it was going to be interesting this time.
Have they? They're better than Google. But most of Facebook's side gigs fizzled. Their last bold leap was from desktop to mobile, and that was only by averting disaster with their Instagram acquisition.
Maybe they thought it was going to fail like Vine and other short video platforms.
ByteDance was a large company before TikTok and had other successful products. TikTok actually developed out of a billion dollar acquisition Bytedance made[1]. It wasn't for sale. Sort of like how Tinder wasn't for sale because it was owned by IAC (Match, OkCupid).
Also regulatory environment in the US and in China would make it unfeasible.
They might want to become a cloud infrastructure provider for some side money and buy themselves some time to figure out this Metaverse fantasy :)
Hey, AWS started because Amazon wanted to lease out their spare infrastructure capacity.
If we are spitballing ideas, If I am Zuck I'm looking at figuring out how to buy Valve or build a gaming platform. I don't know how they can be successful in whatever the fuck the Metaverse is without a gaming/media platform.
He would step in a long queue, and would get the same answer everyone in front of him: Gaben wouldn't let it slip out even from his cold dead hands.
All of these growth idea sounds incredibly boring. More likely? Maybe, but incredibly boring. Meanwhile meta is at least sounds pretty interesting.
There need to be some fun for him to just not permanently retire on his Hawaiian Island.
Anyway Facebook's cash position is $60b, they can't afford it
I like these Zuck spitball ideas tho.
Is the idea really that the metaverse is their big next market? I like VR but who the heck believes FB will lead it?
If you’re paying retail for GCP, you are getting fleeced.
No, it really did not.
The reality is even if Meta has the best data center infrastructure in the world their infrastructure is focused solely on solving their problems and operates under the constraint that it is not consumable by any arbitrary company. aws was built more or less in isolation to amazon's original infrastructure and gcp was built as a layer on top of google's internal infrastructure. there is use in what exists internally but only to (re)build the product you'd sell.
The lead time for them to get even basic primitives out the door would be significant, not even considering the depth of features that more sophisticated cloud customers want.
>>"The tougher part is perhaps not technical, but human. Facebook will have to build out an enterprise sales and support team that is culturally and operationally very different from running an ad-supported social network. Google, also a primarily ad-supported company, suffered from this “identity crisis” and is still trying to catch up to AWS and Azure, despite offering what many believe is a superior technical product."
He also points out they also have a trust deficient due to all the privacy and misinformation scandals.
[1]https://interconnected.blog/why-is-facebook-not-in-the-cloud...
AWS Data centers are fairly small, ~180,000 sq ft or so generally, us-east-2 is about 900,000 sq ft. us-east-1 perhaps 8 million sq ft.
Google likely has more network capacity, but FB is catching up.
Does FB see spikes like that, or is it more consistent? I don't see FB having "spare" capacity to lease. Then again, I'm not a data center manager type, and just sit here in my comfy armchair playing QB.
I think an opportunity can be found in approaching search. They already have so much data about what people are interested in, and they can start by perfecting Facebook Marketplace to a simple user-friendly successor to Craig's List.
Amazon also had built their DCs for Amazon, and Google for Google, so that's not a valid argument. But it does take a lot of work to turn that into a marketable product (and transform your company culture to support it), and I don't think it makes sense for Meta to go down that route.
Facebook is betting the farm on the metaverse stuff but without meaningful financial results that’s not going to placate market concerns over what looks like a downhill future for the core businesses. Facebook’s less than fantastic record at making money on its other businesses doesn’t have the market terribly optimistic about about the future prospects metaverse stuff either. Net net stock down 20%.
This isn't a project that benefits from any of Facebooks strengths - game development companies are much better positioned to make compelling social VR experiences like this.
"Metaverses" in general are a cool 80s sci-fi novel concept. But they're just video game environments with better-than-typical communication features - hyping them up with piles of marketing and betting the farm on your specific one being successful seems like an incredibly poor business move.
I don't think that's true. Game developer company culture is heavily oriented towards making and selling products to consumers. They know how to make games people will pay for, and the entire business and culture revolves around that.
With Meta and other ad-driven companies, the people aren't the consumers, they're the product. The whole incentive structure and architecture of the company is fundamentally different. Think about how a company like Facebook or Google has an entire army of sales people and enormous apps like AdWords and Facebook Ads Manager that are how the company actually makes money. Game companies don't have that kind of stuff.
What they have is a bunch of programmers who know 3D rendering and networking. But Meta can simply hire those people—and game devs are used to bouncing around every couple of years—and they are. Several of my old EA coworkers are at Meta know working on it.
Interestingly, by revenue Apple is more of a one-trick pony than Facebook. iPhone sales are fully half their revenue, and almost all of their software income is totally dependent on iPhones as well. Meanwhile at Meta, Instagram revenue is roughly equal to Facebook revenue.
a similar pattern is happening on instagram although to a lesser degree
the metaverse bet is a good one to try and make something new where the value requires you to be on the fb platform. we will see if it works. i personally don’t see it going anywhere
and it's an odd bet.
Yes, there are issues to work out with the headbands, weight, general FPS and battery life, but I finally _get_ it. The amount of badassery you feel as you shoot headcrabs and combine in Half Life: Alyx is hard to describe in words.
Maybe that's not Metaverse persay (is that like, VR chat or something?), but it is the equipment that Facebook is selling, and they've got their own set of games that're pretty fun too.
I should note that I only play multiplayer experiences with PCVR because I'm afraid of getting banned for whatever reason and having my headset bricked. That's one area I'm worried about, but it's not related to the hardware/technology.
How so? Revenue is up and there's more users. What decline are you referring to?
People have expressed Facebook being passe or not cool for a decade now. They keep growing anyway.
If you mean the data mining and trading, I wouldn't believe that for a second. Sure, it can't go on so openly and monopolised like before, but there is a huge industry built on it already, each new digital service opening up opportunities for a bit of side income. Facebook was an easy target to aim at - but there's your webshop, food delivery service, electricity supplier in the line.
Unless Zuck can pull a Bezos with convincing investors, Meta's stock will be in trouble for a few years until their metaverse division starts becoming profitable; which will be at least a decade if they're focused on growth.
Google and Microsoft have had the same business model forever .
Microsoft has Xbox, Office, Azure, etc.
Google has Android, Google Workplace, GCP, etc.
When you diversify your income streams you add more. It doesn't mean you get rid of your breadwinner.
Facebook's main model seems to becoming illegal and/or not viable via a tech perspective.
But their business models are not same at all, nobody is valuing MS at trillions of dollars for its Windows OS licencing business. In the last 20 years MS has diversifyer into gaming and cloud successfull that are a big chunk of its current business and future growth, even with older products like Office they successfully pivoted to O365 and converted it to a recurring revenue stream.
Amazon is making more money from AWS than retail and evolved a lot as a company.
If the metaverse gamble works Facebook could be looked on as a similar success but until then their growth is risky
Google is probably screwed if search and ads go under, but they seem to be running an interesting experiment on how low quality their search results can get before they lose marketshare...
- Earnings per share: $3.67 vs $3.84 expected
- Revenue: $33.67 billion vs $33.4 billion expected
- Daily Active Users (DAUs): 1.93 billion vs 1.95 billion expected
- Monthly Active Users (MAUs): 2.91 billion vs 2.95 billion expected
- Average Revenue per User (ARPU): $11.57 vs $11.38 expected
- Q1 revenue guidance was $27 billion to $29 billion, while analysts were expecting sales of $30.15 billionThis seems more like a symptom of the market being generally skittish, with a small side of "expected" earnings actually being a low-biased estimate, so it's more like a 10% miss.
The miss is also against future guidance. This could be answering a question of “Is Facebook too distracted to grow their core business?”
Anyone who thinks they’re more rational than the market can take the other side of these large moves. (Many quant hedge funds do)
Stimulus checks combined with broad accessibility of trading platforms (Robinhood, etc.) led to fund inflows growing 71% https://www.reuters.com/markets/europe/global-markets-etf-gr...
And that's just ETF inflows aside from mutual funds and options markets.
The top recipients, according to the article linked above, were VOO, VTI and SPY. All follow an index that's market-cap-weighed, benefiting top 10 holdings more than the rest of the market.
The explanation I've seen floated is retail investors treating VOO and VTI as their savings account (for the lack of any decent yield opportunities). That money is eventually going to be withdrawn and spent, punishing those top 10 holdings excessively compared to the rest of the market.
A basic quantitative analysis of earnings estimates reveals that they are not particularly accurate when compared to the earnings guidance given by the company itself, and in the rare cases where companies provide no guidance, estimates are almost worthless.
All this is to say don't confuse the term "Wall Street estimates" with what people who actually buy and sell stock estimate. The actual people who have skin in the game and face tangible consequences if they're wrong don't take these earnings estimates that seriously, and conversely the analysts who produce these estimates don't have much of any skin in the game themselves and suffer next to no consequences for being wrong.
Slow growth (the low end number on guidance for next quarter is 3% growth) and not making the DAU numbers support that thesis for them.
Live by the growth, die by the growth.
Despite having just about every living human as their customer they are expected to grow.
WhatsApp has basically zero monetization right now but billions of users. Huge potential cash cow.
Instagram still has a ton of potential for further optimized monetization. Think fully embedded 1-click buying for things like fashion, gadgets, accessories. They could take a decent cut of Shopifys business if executed right.
Meta made in Q4-2020 53.56B in ad rev in the US and Canada. Meta only made 4.05B in Asia Pacific in Q4-2020.
https://www.statista.com/statistics/251328/facebooks-average...
> Facebook is dying slowly in the developed world, that is true. However it is still growing in emerging markets.
+1, though this is a slow and not necessarily viable bet. Meta makes about 12x more revenue from their USA/Canada ($52/Q) users than their Asia-Pacific users for example ($4.3/Q).
Market share in the USA is extremely valuable, not only for Meta, but for a lot of companies. Apple for example sits at a $3 trillion market cap in spite of Android dominating the global mobile market because iOS captures not the most users, but the most valuable.
> WhatsApp has basically zero monetization right now but billions of users. Huge potential cash cow.
I agree with this. I think there's a lot of potential in WhatsApp, though I also see two shortcomings with betting too much on it:
- WhatsApp is largely used in countries where users are harder to monetize. As stated above, user count matters, but it's not the only factor when it comes to generating revenue.
- Messaging is very competitive. A change in WhatsApp's TOS was widely reported to have triggered millions of new user sign ups on Telegram and Signal after just a few weeks [1]. I don't how accurate or overblown this correlation might be, but I do know anecdotally I text people through many different apps, and have switched the primary app I used to text different people multiple times in the last few years.
> Instagram still has a ton of potential for further optimized monetization.
I think this is still the most straight-forward path to increasing revenue Meta has, and I imagine they're trying to make sure it doesn't fade away like Facebook is.
[1]: https://www.theguardian.com/technology/2021/jan/24/whatsapp-...
I feel like instagram is no longer an actual photo sharing app, just a place where high profile users promote stuff to their followers.
I think this right there is the biggest issue for the companies that sell consumer data. Google has had so many golden eggs, office365 before Microsoft, the cloud infrastructure before AWS and so on, and they keep fumbling the ball because their organisation is geared toward a very different form of sales.
The fact that Instagram didn’t become an Etsy styled platform for artists when it was the main platform for sharing semi-professional “hobby” work should tell you everything you need to know about how little Facebook understands markets that aren’t selling privacy data. Because even if they opened up now that ship has sailed as less and less people who produce things rely on Instagram as a platform because the younger audiences aren’t there.
> It’s a slight earnings miss. The price will rebound in the morning and it’ll be back up in a week or two.
The earnings for this company are truly staggering. They made 11$/user. Their earnings were up 34% year-over-year – on a base of 29B dollars. They made 10B more this year than they did last year, and the comments in here are all about, "boy Apple fucked them, and Meta suxor!"
You people are nuts.
While I don't love FB as an entity, as a business they are making fucking bank. They are running a printing press, and the world is eating it up. Y'all need to switch to decaf or something. Their numbers are truly staggering.
Precisely. It's actually a very long term battle between Meta, Apple and Google. Not even a widespread outage can stop them.
It would be a mistake to write them off immediately over this atrocious earnings call, no matter how much I think of them as a mafia. Business-wise, it is far from over.
Oh wow, they made $11! Let's forget everything else.
> The earnings for this company are truly staggering. ...
> You people are nuts.
> While I don't love FB as an entity, as a business they are making fucking bank. ...
Purdue Pharmaceuticals made a lot of money, too.
I hope Zuckerberg pulls off Meta and what he's trying to do. He's an extremely good CEO, and the alternative is more power in the hands of TikTok and CCP controlled social media which I think is a lot worse.
I'm glad to see the investment they're making in trying to build a new platform, I hope we see AR hardware from Apple soon too.
While there is no such thing as a perfectly-ethical company within a Capitalist framework, there are degrees of ethical behavior that rightly influence a company's reputation.
Would I choose to work or support a company that clubs baby seals?
Less hyperbolic, would I choose to support a company that continually seeks to profit from promoting extremism in dialogue, creating self-perpetuating echo-chambers which have real-world consequences (re: the very real danger to American democratic processes), in addition to brainwashing people's parents into believing in utter hogwash and tearing families apart?
Yes, they are making bank. But at what cost? And should that cost influence your interaction with said company?
I know most people on here really dislike targeted advertising. I’m not going to speculate on the potential future problems that tracking could lead to, and I think it’s very reasonable to be concerned. But so far targeted advertisement has been a net positive for me. I’ve gotten to use some really good applications for free, and I’ve gotten ads that are actually relevant.
At the end of the day, that's why Google and Facebook will fight tooth and nail to avoid subscription offerings.
And fundamentally... Facebook's stock should be hammered. They're effectively a legacy platform attempting to milk more revenue from their existing users.
They missed the 2010-2020 opportunity to diversify away from ad-based revenue, and now they look more like 2000s Microsoft, unable to imagine outside their core revenue generator. Which is why their acquisitions have been "new Facebook" instead of "different than Facebook."
It makes little to no financial sense, compared to other tech and web companies, for Facebook stock to remain down 25%. Their PE is going to be like 17.5 now.
Like when I search for hiking shoes, that’s when you should advertise, now for the next two months. I’m not going to buy a second pair for another 20 years after all, and if it’s to reassure me I made the right purchases then they shouldn’t be for variating brands.
But I mean, you’re probably right, why else would various sales decision spend so much money on advertisement companies?
I think the “pay with your privacy” model is probably coming to an end though. At least here in the EU that seems to be the long term plan, and I think Apple might agree with me.
As an aside, something happened to my instagram ad-targeting profile a few months ago and the ads that I normally get (tech-industry stuff, photography, art shows, books...) were replaced by what I assume were lowest-common-denominator general population ads (replica-of-expensive-items scams, crypto scams, investment scams, sports, populist politicians, pawnshops, wedding services...) for a couple of weeks; it was as if looking in a nightmarish mirror universe.
I think the tracking backlash helps the big consumer goods conglomerates and hurts the startup niche product marketers. Look at Dollar Shave Club and all the other consumer products underdogs that were able to take massive marketshare from Proctor and Gamble and the like through smart ad targeting.
It shows that Facebook positioning itself as a "platform" in the first place is total nonsense. That's why Zuck wanted Oculus to succeed so bad. He knows he is at the mercy of actual platform providers like Apple and Google for everything.
https://www.eff.org/deeplinks/2021/11/eu-parliament-takes-fi...
Never underestimate the blue message bubble y'all. That's real leverage.
imo Apple will help Meta by helping make XR more socially acceptable, along with Apple's premium pricing which locks some people out. I do not believe VR's current form factor is socially acceptable right now. Even if you remove problems such as cost, tech complexity, and even the toxicity surrounding Facebook's brand; the masses still will not accept it until Apple ships their solution.
Only in north America. Like it or not, there is faaarrrrrr more future money to be made with the 3B ish people of china+india than the 0.4B americans.
A lot of golden handcuffs are being unshackled right now
One can hope...
They can change their name all they want, they are slowing turning into the AOL of our decade. I'm willing to take bets on where this is all going.
I own an Oculus - it sucks. The founder of Oculus admits it sucks. Instagram sucks more than it did last year. I dont have a FB account, but it sounds like it's an ad-driven hell-hole.
Eventually FB will lose because their entire business model is based on outrage, and that cant last forever. It's very clear it is having catastrophic consequences for societies everywhere.
What is the saying .. ?
"The chickens will eventually came home to roost"
Why? Which model?
> I dont have a FB account, but it sounds like it's an ad-driven hell-hole.
Don't you need a Facebook account for Oculus?
Palmer Luckey? I believe you, but I was wondering if you had a quote/reference for that.
It is a screaming buy signal.
1. The CEOs insistence on "Competition" as the cause for the increased focus on short term impression rates seems pointed at regulators and Congress rather than at investors. This is silly too, Google had no such pressure on impressions and performed rather well just days before.
2. The cat is out of the bag. Facebooks secret sauce was their very HEAVY focus on bottom funnel advertising where they would ascribe suspect numbers that were not Industry standard to "Conversion" objectives (RoAS anyone?). Anyone, anywhere sees an ad at any point in their conversion journey and Facebook would assign a large weighted portion of conversions leading from that individual in their reporting.
3. The big scary underlined headline here should be HOW POWERFUL APPLE IS. They sneeze and change one small thing in the way apps can access their platforms and we see an entire industry shaken.
4. They won't die out quick. These numbers, though not "Growing" as fast as befor or expected to grow as fast (which is the bigger concern), still is much, much , much higher than they need to sustain their business over the next two decades. The big risk though, is the stock price drop which is how the bulk of their pricy talent is paid dropping. Everyone there is currently staring at a 25% pay cut on their stock based comp and that is not a pretty picture for attracting the best kids graduating this year with ambitions of joining a fast growing tech firm or pulling in talent from places like MSFT or GOOG or AAPL who will not want to jump aboard a perceived sinking ship.
I highly doubt all of the Apple defenders would feel the same way if Microsoft was charging 30% fee for substantially all commerce on windows. It's a huge transfer of wealth from the entire ecosystem of developers to a single company, when that company added very little marginal value to the developer's offering.
Also now retail platforms give the r/WSB crowd even more ways to punt and gamble in the after hours.
Point is, see where the stock ends up over the next day or two...
Facebook loses users for the first time - https://news.ycombinator.com/item?id=30186326 - Feb 2022 (395 comments)
$2850B Apple $2350B Microsoft $1950B Alphabet $1500B Amazon
I mean you need to be at least Trillion dollar market cap to join the club, the only other trillion dollar market cap crop is Saudi Aramco. But I think we should ignore that. May be dropping Meta from the MAMAA? Even Amazon is twice its size, and at the top Apple is Four times the size.
It is also interesting around Facebook IPO in 2011 / 2012, I actually expected Google and Facebook will destroy each other and become one. either Google winning Social or Facebook took over Search within next 10 years. That didn't happen. Google tries to enter social but have absolutely not a god damn idea what they are doing. It wasn't clear to me then at the time Google had no product mindset.
Had that happened the combined company would be the same size as Apple.
It will be interesting to see Amazon's report in a few hours time. I am wondering if they will join the 2 Trillion dollar club soon.
I noticed that often times these dips lead to sensationalist headlines like "Apple shares tank 5% after abysmal earnings". When I looked into these headlines, I often noticed that the stock often "plummeted" to the price it was at a week or two prior.
To counter this, one metric I use is, "When was the last time the stock was at this new price?"
Today Facebook shares are trading at ~$238. The last time it was trading at this price was June 2020.
the stock had gone up so much since then that expectations had gotten too high.
FB/Meta still makes a crapload of money, just not as much as some analysts had expected.
The tech sector as a whole dropped 13% in Jan, same as FB shares,following a massive (overdue) correction. Most likely FB did a flat return once market/sector residualized. What's all the fuss about?