Meta -- February 5, 2022

This is a fascinating article in The New York Times. For some reason it was not behind a paywall.

"Six Reasons Why Meta Is In Trouble."

See if you can spot how many of these six reasons affect any of the other stocks you own.

One: user growth has hit a ceiling. Not only hit a ceiling but numbers are actually declining.

Two: Apple. Security. Will cost Meta $10 billion in revenue "next year" (2022).

Three: Google is stealing online advertising share.

Four: TikTok vs Reels. Videos harder to monetize at same level as other options.

Five: Spending on metaverse is bonkers. No one understands it, and those that say they do, know it won't be profitable for years. And who will have the best headsets when the metaverse really is a thing? Apple.

Six: The specter of antitrust looms. Won't happen.

Investors may worry about shale oil and frackers (I have to get back to that Wall Street Journal -- memo to self) but Facebook - Meta - metaverse -- is already here as a very, very concerning investment issue. 

So, of the six points made above, how many of those affect your investments? For me: none. Nada. Zilch. Goose egg. 

Not mentioned: inflation. Facebook is still free-to-use as far as I know (I don't "use" Facebook) so Meta's costs increase but it's hard to raise subscriptions prices that don't exist, unlike Amazon. Almost all other successful businesses are going to be able to pass inflation costs on to their customers, like Amazon. And Procter and Gamble. And Ford.

Not mentioned: the Canadian #GoFundMe fiasco. Did #GoFundMe just shoot itself in the foot? It's hard to believe one would use #GoFundMe now that the truth is out. It's a "woke"  slush fund. a

Not mentioned:  how much everyone likes Mark Zuckerberg.

Not mentioned, except as a sub-bullet for reason #1 above: the most important demographic, those between the ages of 14 years old and 45 years old, have moved on, not using Facebook as much as they used to, so it's  not just subscriber growth, but also time spent on the site:

• the younger folks use Snapchat, TikTok, YouTube,
  
• the working folks use LinkedIn: even the FBI is worried about the number (and quality) of folks on LinkedIn; when it comes to Chinese espionage, the FBI did not single out Facebook;
  
• the folks using Facebook: retirees, and especially older retirees in fly-over country

Not mentioned: it was Facebook's heyday when everyone was stuck at home during massive lockdowns. But Covid-19 is in our rear view mirrors and receding fast. The TikTok users are driving Teslas; the F-150 Lightning; the Facebook users are driving "The Little Blue Truck" -- the favorite book of our two-year-old twin grandsons. Once the lockdowns end, people will use Facebook a whole lot less.

Not mentioned: other than advertising, what other revenue stream does Meta have?

Not mentioned: panic. To right the ship, Meta is likely to make some bad choices and/or bad acquisitions. At the top of that bad-choice list: Pelaton. 

Not mentioned: no content, except that provided by users. 

Not mentioned: folks getting more clever. If small businesses want exposure, they can easily set up their own webpage without going through Facebook. Or they can set their webpage up through Facebook and then tell their users to bookmark their site and skip going through Facebook in the future.

Not mentioned directly: with a market loss of that extent, Meta has fewer options going forward investing in their own company; paying a dividend; announcing a share-buyback program. Sort of a death spiral unless things correct quickly. In the short term, investors are jumping ship as fast as they can making the situation worse. To get through this period, better guidance is needed. That guidance is not only forthcoming but anyone can see the six reasons listed by The New York Times are not going to go away any time soon.