The Rise and Fall of Facebook Stock – How the Metaverse Killed Facebook

October 21st 2021 is possibly the biggest day in Facebook’s history - it’s the day that Facebook CEO Mark Zuckerberg announced that the company would be rebranding and renaming itself to Meta. Along with the new name, the company would be changing its focus from its social media platforms to building the metaverse. This is also the day that marked the turning point for Facebook’s stock - since the company announced the Meta name and its Metaverse ambitions, its stock has now crashed over 60% in just over a year. This begs the question, why are investors now running for the exits and selling Meta’s stock? As you’ll soon see, it’s no coincidence that this day started the beginning of the end for the company’s once dominant stock. In this video, we’ll be looking at the events that have caused Meta’s business to start crumbling and how the metaverse has been failing and costing the company billions of dollars in the process. This is the story of the rise and fall of Facebook stock and how the metaverse killed facebook.

In the face of losing ground to social media competitors and the major Apple privacy changes that hurt Facebook’s advertising business, CEO Mark Zuckerberg announced his plans to rebrand the company to Meta and to invest heavily in building the metaverse as the future of the business. For those of you who might be wondering what the metaverse even means and is supposed to be, the basic concept of the metaverse is that it’s an immersive virtual world that’s facilitated by augmented and virtual reality functionality. Facebook originally acquired the VR company Oculus back in 2014, one of the leading manufacturers of virtual reality headsets, and has been planning on investing heavily in research and development to improve the virtual reality tech and build the Metaverse.

The sudden blow to Meta’s advertising business revenues combined with the massive spending the company was now investing into building the metaverse has been a one-two punch to the company’s profitability. They are now making less money on the advertising side of the business and metaverse business costs are skyrocketing. Since 2019, the company has reportedly spent $36 billion in its Metaverse division.

Now $36 billion dollars is a lot of money. In fact, it’s worth more than a lot of entire companies in the stock market, let alone most companies' research and development budgets. So with this much money being spent on the metaverse, you would think that Meta would have a super impressive product to show for it. But instead, the company’s first effort has been a free to play application called horizon worlds that has been very underwhelming to say the least. Despite being free, the app has received overwhelmingly negative reviews and widespread criticism for its uninspired and underwhelming look. In addition to the soulless creative direction of horizon worlds, the graphics honestly look like they could be from a Playstation 2 game.

The fact that Meta’s advertising business has been crippled by privacy changes and competitors and that it is spending billions of dollars to build a Metaverse that no one seems to actually want has created a perfect storm for the company. Meta’s stock has absolutely tanked in response to these struggles.

Investors are genuinely worried that the Metaverse may be an expensive and unprofitable dead end for the company. To the more cynical person, it might even look like a desperate attempt to pivot the business model for a company whose core advertising business and social media platforms are declining. Facebook’s once successful stock started to die the day the company announced its change in direction. As a reflection of the many struggles facing the company, Meta announced on November 9th that it would be laying off over 11,000 employees, or roughly 13% of its staff. It remains to be seen if Meta and Mark Zuckerberg can right the ship and get the business back on track, but for now it’s clear that the Metaverse is killing Meta’s stock. And it’s looking more and more likely that the best days for the company and its stock are well behind it at this point.

Timestamps:

0:00 Introduction
1:29 Facebook Stock's Success
2:33 Apple's iOS Changes Crush Facebook's Revenue
5:04 Facebook is Losing to Competition
8:00 Facebook Rebrands to Meta
9:38 How Meta's Horizon World's is Failing
12:18 Meta's Employees Don't Even Like Horizon Worlds

Disclaimer: Opinions expressed in this video are my personal opinion and are for information and entertainment purposes only. It is not intended to be investment advice and you are responsible for doing research and making your own investment decisions. Seek a licensed professional for investment advice.

#metaverse #meta #facebook