Meta’s share price has been on the wane this week, with its 25% drop on Thursday only darkening an already dark year for the stock market. Like other tech giants, the ex-Facebook is facing economic headwinds. But to this is added the persistent disbelief of its shareholders in the face of a metaverse shift whose profitability profile is still unclear.
Thursday’s tumble swells the company’s year-on-year stock market erosion to more than 70% and takes its price to a low not seen since January 2016. From a high of US$352.83 to a low of 96 US$.38 in 52 weeks, this fall lowers the market capitalization of Meta to US$266 billion, against some 1000 billion a year ago.
The publication of its financial results on Thursday showed a decline in revenue for a second consecutive quarter, to 27.7 billion, and a 52% decline in profit, to 4.4 billion in the third quarter.
“We are dealing with an unstable macroeconomic environment, increased competition, advertising targeting issues and increased costs for our long-term investments, but I must say that our products seem to be doing better than some comments suggest. suggest”, summarized Mark Zuckerberg, Wednesday, according to the text of Agence France-Presse.
Like other players in the industry, Meta is feeling the effects of inflation, rising interest rates, the economic downturn (which is fueling a downward revision of marketing budgets) and new rules. from Apple’s game. Not to mention the entry of TikTok into the social media market, of which it quickly captured a large share.
But Mark Zuckerberg does not budge. Investments will first go to “artificial intelligence technologies that make it possible to recommend reals users, messaging advertising tools, and our vision for the metaverse. These priorities make sense, given the direction in which the world seems to be heading,” reads the AFP text.
However, he still fails to convince that the foray into the Metaverse will not become a money pit. At the very least, analysts will criticize him for only focusing on the future promise of the metaverse and diverting his attention “from the harsh current reality”. To also remind him that Facebook, which became Meta last year, has already committed more than 20 billion in two years to the adventure and that the Reality Labs division, housing virtual and augmented reality platforms and equipment, continues to dig his losses.
That said, looking at the bet from the other side of the telescope, if it turns out that the metaverse will become a dominant growth vector in Web 3.0 and that the Internet of tomorrow will spell the end of Facebook, Instagram, LinkedIn, TikTok and others with a shift in advertising volume to this immersive and interoperable universe, the Facebook founder’s shift could defend itself. If only to try to counter the exhaustion of its growth potential.
If, for the time being, the metaverse is synonymous with speculation on a virtual real estate market or transactions of non-fungible tokens, the report published in June by the private consulting firm McKinsey speaks of a growth potential that could create a market for US$5 trillion in 2030, equivalent to the size of Japan’s economy. Some 2600 billion come from online commerce; 270 billion, from the virtual education and training market; 206 billion, advertising-marketing; and 125 billion, online games.
While current interest is focused on games, applications are increasing, especially in the areas of socializing, physical training, commerce and virtual learning. Among consumers, the list of interest in this augmented reality also covers socializing, entertainment, travel and shopping. And among companies, the ranking includes marketing, training, event organization, product design and digital matchmaking.
The expected percentage of adoption over the next three to five years will exceed 60% in the energy and resources, high technology, media and entertainment, public sector financial services and healthcare industries. health and professional services.