It seems, for Big Tech, a whirlwind trip down the path and a quick descent from the trillion dollar threshold.
Trillion dollar market capitalization, to be exact.
For Meta Platforms (Facebook’s parent company), this milestone seems far and away, a positive feature of investor sentiment that has evaporated.
For those keeping track, just over a year ago the social media giant was trading at such high levels, trailing Apple and Microsoft in the billion-dollar circle. In retrospect, this high water market followed news that a Washington DC district court had dismissed the Federal Trade Commission’s antitrust lawsuit against the company.
And now, as of this writing, as we enter a holiday-shortened trading week, the company’s market capitalization is roughly half of what it was a year ago, at around $420 billion.
What happened is… well, a lot.
The company’s name change, Meta from Facebook, speaks volumes about a change in roadmap that has worried and may continue to worry investors. It is not easy to move from social media to the metaverse.
Crypto? Well, that seems almost moribund, because Libra has indeed come and gone. As reported last week, the company is shutting down its Novi digital wallet. Users have until September to withdraw their balances.
On a larger scale, macro headwinds are wreaking havoc. The company, as reported this week, has reduced its hiring activities and is leaving at least some vacancies.
Read also: Meta cracks down as Zuckerberg tells team to do more with less
We argue that slowing down some of this business building – especially with engineering positions – ends up slowing innovation-focused initiatives.
And in the meantime, core businesses – apps, of course – are facing pressure. In its latest revenue report, we can see that Facebook’s monthly active users grew only 3% year-over-year. The company’s total revenue from ad-related revenue rose 6% to just under $27 billion. That’s a far cry from the double-digit growth rates seen in previous quarters and years. It’s advertising revenue that ultimately fuels funding for other new (and potential) businesses. The stock itself can also be a currency, where new issues can bring capital to the company’s coffers. The two avenues of funding the move to the metaverse, as noted above, aren’t as robust as they once were.
WhatsApp monetization may be in the cards, and indeed, at a high level, the company is launching a payment tool for creators looking to make the metaverse a reality on the Horizon Worlds platform. The company is aiming for a significant reduction, to around 50% of sales.
Read also: Meta is opening its Metaverse platform to payments, and it’s not cheap
As for the Metaverse itself, the jury is still out on when, how, and how much traction there will be in the short and long term. There’s at least some collaboration going on: Three dozen companies, ranging from Meta and Microsoft to Alibaba and Ikea, have announced the creation of an organization focused on building the metaverse and its social media compatibility, games, payments, etc.
Read more: Is the metaverse just the web wearing 3D glasses?
For Meta, at least, this is all shaping up to be a “show me” story – and the market cap haircut belies healthy skepticism.