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Q2 Results: Is Meta Losing Ground By Running After The Metaverse?

Aug. 02, 2022 4:27 PM ETMeta Platforms, Inc. (META)GOOG, GOOGL, SNAP, AAPL28 Comments
Davide Ravera profile picture
Davide Ravera


  • Quarterly results were negative, and the company decided to decrease investment in Reality Labs.
  • The Metaverse is as large as it is elusive. A trillion dollars that could completely change Meta.
  • Meta's business is suffering because of the declining cost of ads, which may continue to be depressed for a long time.
  • The company has decided to invest heavily in AI. This choice could significantly change the way Meta's social media works.

Meta logo is shown on a device screen

Fritz Jorgensen

The business of Meta

Meta's (NASDAQ:META) business revolves around advertisements: through its family of applications which includes Facebook, Instagram, and WhatsApp, Meta allows companies to advertise to a specific target audience. All companies interested in advertising on Meta's applications must participate

This article was written by

Davide Ravera profile picture
Registered Financial Advisor in Italy (Consulente Finanziario Autonomo, Delibera OCF n. 1735). I am a growth-oriented value investor, mainly covering GARP stocks. I tend to be a contrarian investor, in order to take advantage of negative market sentiment. Hence, my stock picks tend to have a long time horizon (5+ years).I am a Quantitative Finance Graduate from WU Vienna and I used to work in the financial sector for different institutions and in various roles during my studies. I also started creating a community of Italian investors and you can find me on different social media: YouTube (@davideravera), Instagram (@davideravera.l), LinkedIn (@davideravera), TikTok (@davideravera.l).All of my articles are written to share my personal research and do not represent general or personalized financial advice of any kind.

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Comments (28)

The Metaverse will change the web once again. Web 2.0 —> Web 3.0.
sigalum profile picture
Look at the stock price. That should answer the question you pose in the title.
833233pla profile picture
The number of users include dead people and people who don’t use the service anymore. An unreliable number
They are lossing some business to Google I suspect. With Google people are willing to come to them and share what is on their mind.

So they do not have the privacy issues that FB/Meta is experiencing. It should make more and more business move from Meta to Google.
@DropDonuts In fact they complement each other, Google is selling less ads these days as well. Google cannot compete with Meta on visual and social Ads. Nor on Messaging. As Meta cannot on Search. They don’t replace each other. They both eat advertisers to TV, Radio, Magazines, etc. Privacy on Meta is a narrative, I mean noise from the incumbent media. To 3.6 bl users privacy is not an issue.
@Alfred44 Meta is in decline. Google just put up 13% growth. The two are going in the opposite directions.


More and more advertising will move from Meta to Google as we are already seeing happen.

It should accelerate as privacy becomes more important to users.

> Privacy on Meta is a narrative

What? Meta has shared that the Apple changes are killilng them. It should only get worse as Google tightens up privacy also on Android.

“More and more advertising will move from Meta to Google as we are already seeing happen.”

Totally wrong! Have you ever use them to promote? You need to understand how they both are useful and complement each other from the advertiser standpoint. They both have lower growth or no growth (like Meta and this will change of course just wait and see) because of the recession. But NOBODY will move Ads from Meta to Google, they deliver totally different services. They are still a necessity for companies from all over the world.

Privacy on Meta? Read again: “Privacy on Meta is a narrative, I mean noise from the incumbent media. To 3.6 bl users privacy is not an issue.” I said: For the 3.6 bl Meta’s users is NOT AN ISSUE! Users are growing at 4%, more users than ever.
Bello leggere un italiano qui. I still don’t understand why Facebook, after the demise of the lybra project, didn’t pursue a “WhatsApp pay”. They didn’t really need a cryptocurrency to do that. It seems to me a very simple way to monetize WhatsApp, with a huge, huge account number that could make WhatsApp the n.1 payment initiator in many countries at the very moment it is launched. I mean, in Europe literally everybody and their aunt is using WhatsApp! Regulation is tricky but meta definitely has the recourses to make it happen. As a facebook shareholder, metaverse concerns me: it looks like a completely different thing than what facebook has done until now and the path to revenues here is not clear to me, so I’m wondering if meta and I should part our ways.
Awful company - I feel for individual investors though. What the main apps of META have been doing to the fabric of society though is just reprehensible.
The Hive Mind is beginning to lose the chess game against Private Thought. The Metaverse is just one chess piece on a board full of them.
Is that title a 'trick' question? Will there be a quiz?
ChristopherSmith profile picture
The metaverse will be large. The problem for Meta is that a large number of companies realize this and are and will be competing for the same piece of business. No company, even Meta, will be able to dominate and build a moat in its dealings in the meta……..
Ad revenue will pick up when the economy picks up, no concern there, still a great place to buy ads. Also, people still love discounting Zuck the Metaverse which I find laughable. The Metaverse will be a huge market and I expect Meta to become a market share leader in commerce for the Metaverse. This is the definition of buy when there’s blood in the streets.
@Tdog88 Also people forget Zuckerberg created and successfully monetized an entire new industry.

Social media was a fluke before Facebook really started to take off. Who is to say the metaverse would not work in the same way? It is stupid until all of a sudden everyone is on there.
sigalum profile picture
@geo0rgi I think this time it's actually stupid.
Nir Nabar profile picture
@sigalum , tell that to 15 million people who brought Oculus Quest 2 in 2021. 14.8 million units sold as per data provided by the International Data Corporation.
17144952 profile picture
Anyone remember Libra?
Anyone who thinks this is a good investment…..I wanna tell you bout this little startup MySpace I heard about….
@matthadder11 how much revenue did MySpace do at its peak? What other multi-billion products did MySpace own? How many billions of users did MySpace have?
@Tdog88 This is what I don't understand. Comparing Facebook to MySpace is like comparing Apple to Motorola. Just because Motorola shat the bed doesn't mean Apple will aswell, just because they are in the same industry.
Frank Thomas in Florida profile picture
At what point will Facebook pull the plug on the Metaverse experiment? Losses on Metaverse are probably approaching the $100 billion mark. When, if ever, will Facebook pull the plug on this dumb idea called “Metaverse?”
@Frank Thomas in Florida they won’t because it’s the next disruptive market. This is why Zuckerberg is worth $80B and you’re worth….big ideas and execution vs. very small ideas and doubt. No offense, this is just how life works.
@Tdog88 if only one’s credibility or value of any statement was to be assessed based on his/her bank account size. And if only, one’s person ability (and great luck if you ask me) to create wealth through a specific endeavor was to translate into that person being infallible in all instances.
@Tdog88 small people fail small, big people fail big
This article fails to recognize the convergence of advertising + metaverse. This convergence can incrrase Meta’s revenues exponentially (read..not linearly) in future. Metaverse is a capex game with a moratorium oc 3-5 years for pay back to start. Patience is advised instead of quick judgements
sigalum profile picture
@billionaireinvestor If anyone in this market (that only wants to go up) saw ANY future value here, the stock would be trading at a much higher multiple. But it isn't.
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