The worst quarter in years. Valuations tumbling. In the second quarter, Facebook’s parent Meta Platforms saw its stock fall more than 27%. At a moment when the tech giant is desperately trying to grow out it’s new Web3 and Metaverse offerings. 27% is bad you might think. But Meta collapsed by about 34% in the first quarter. Remember how in February, Meta said its daily active users on Facebook had decreased quarter-over-quarter for the first time. Can Meta’s stock price recover?
Stories have emerged in the last weeks from both Mark Zuckerberg, as well as several leading figures from within Meta. None of the stories are particularly positive. They come not long after the departure of the companies Chief Operating Officer, Sheryl Sandberg. Another not so positive story. The tech giant is facing some of the biggest challenges it has faced since it’s early days. Let’s see why.
Facebook’s bet on the Metaverse
It was not a whole year ago when Zuckerberg went online to unveil Meta as the new identity of the social media company. Prompted by the move into the metaverse, the new identity and new direction looked compelling. At the time.
This year Meta went a step further and announced the new payment method in the metaverse. Meta Pay was announced by Stephane Kasriel, Meta’s head of commerce and financial technologies in a blog post. The blog claims how Meta is ‘bullish’ about Web3. How the metaverse has the potential to be much more interoperable and portable than many online experiences available today.
“Imagine a world where entertainers or athletes can sell NFTs that fans purchase to display in their virtual Horizon Homes,” Kasriel explains. “Imagine …. when your favourite artist is playing a concert in the metaverse and shares an NFT you can buy to get a backstage pass for after the show.”
Kasriel is a tech veteran who worked at PayPal previously. The move by Zuckerberg into the payments area seems to be working. At least it might have a higher chance of succeeding than the ill-fated Diem. A costly exercise for the tech giant. A mistake they can’t afford to repeat with a downturn threatening.
The changing leadership at Meta
It was only a few months ago that we reported on Nick Clegg’s new role at Meta. One of the interesting things to note at the time, was how Clegg had reported to Sheryl Sandberg until the announcement. In his new role he reports straight to Zuckerberg.
Sandberg is one of the people that some people think Zuckerberg blames for the Cambridge Analytica debacle. Was the writing always on the wall for her then? What we do know is that she didn’t last long after Clegg’s promotion.
Sandberg will step down in the fall after 14 years at Facebook’s Meta. In a post on Facebook, she shared the news with users. Her acknowledgement of how social media has changed is perhaps the most compelling part of her post. Admitting that the “debate around social media has changed beyond recognition since those early days.” Sandberg added how the products she was involved in making have had a “huge impact.” Whether the tech giant recovers its growth trajectory will no longer be in her remit though. Others will have to take up the challenge to grow into the metaverse.
Can Meta’s stock price recover?
When addressing one’s stock price, especially when facing a downturn, it can be prudent to trim costs. Investors respect companies who show caution when heading into a recession. Bearing this in mind, perhaps its not a surprise that we all saw Zuckerberg’s message to employees this morning:
According to data available on TradingView, analysts are suggesting that Meta is a ‘Buy’ stock. The price may well go up to $280 per share, but will it start its upward trajectory in 2022? Right now, Meta’s stock price is languishing at about $160 per share. And the road to recovery isn’t so clear cut. Even with Zuckerberg’s well timed speech this week.
How is Meta doing compared to the other FAANGs?
All the top U.S. tech stocks have fallen since January this year. Some have fallen more than others.
Apple is down 23% whilst Google’s Alphabet is down almost 25%. Netflix is down by an astronomical 71%, with Amazon’s stock dropped 37%. Even Tesla is down 37%.
Meta isn’t in much better shape than Netflix. Down almost 53% so far this year. Possibly the reason for some analysts to give the firm a buy rating right now. At least the prospects for Meta are probably better than those being faced by the team at Netflix.
It has been one of the most challenging six months in the history of the FAANGs. Whether Meta has done enough to start to recover its stock price is a question that will unfurl over the next months. More importantly. How much will the loss in users and investor sentiment hurt Meta’s plans for the metaverse? It might be better to back a different horse for now. Especially until the Sandberg issue clarifies. The last thing Meta’s stock price needs, is to be dragged through the courts again…
Author: Andy Samu
This Article is most definitely not Financial Advice.
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