8 ms·

I agree with your assessment, and I’m a long term holder. I’d love to hear your rebuttal to the following bear case: - $10 billion to Reality Labs R&D in 2021

I agree with your assessment, and I’m a long term holder. I’d love to hear your rebuttal to the following bear case: - $10 billion to Reality Labs R&D in 2021 expected to increase annually will eat into earnings - Last year saw first ever decline in US Facebook user base, expected to continue shrinking (albeit slowly) - Apple’s 2021 opt-in privacy change makes FB/Insta/Messenger/WhatsApp ads less effective permanently for the highest margin demographic (iPhone users) - Hugely negative public sentiment* hurts adoption and makes continued litigation headwinds likely * to be clear, I think the negative sentiment is unfair towards Meta. You use their service and in exchange they show you ads based on your behavior. They’ve always been transparent about that, there’s nothing particularly secretive or nefarious going on. Ads power most of the free internet stuff we enjoy. YouTube, Snap, Google search, Tiktok, they all do the same thing! But people for whatever reason really seethe when it comes to Mark Zuckerberg and FB. In fact, it’s pretty insane that TikTok isn’t under more scrutiny in the US from a national security perspective. At least the other ad-powered entertainment apps aren’t controlled by a foreign adversary!

redeux 4y ago
> there’s nothing particularly secretive or nefarious going on. Other than selling data and ads to foreign groups that use it for electioneering / sowing domestic discord. Minor detail though, I’m sure.
- Evan_Hellmuth 4y ago
  They don’t sell data, they let anyone who buys ads choose who the ads go to based on anonymized data. They also made it way harder to run political ads after public sentiment changed in 2016. You can go buy an ad from them right now. So can “foreign groups.” Neither of you will get access to anyone’s data. Same goes for YouTube, Twitter, Snap, etc. If you’re worried about “foreign groups” there’s this Chinese app called TikTok that knows everything about every American under 30 that no one seems to be concerned about.
  - redeux 4y ago
    > They don’t sell data, they let anyone who buys ads choose who the ads go to based on anonymized data. You're using the current supposed state as if it excuses or negates previous behavior. It doesn't. Facebook has sold data in the recent past. https://www.bbc.com/news/technology-46618582 https://www.bbc.com/news/technology-46618582 > If you’re worried about “foreign groups” there’s this Chinese app called TikTok that knows everything about every American under 30 that no one seems to be concerned about. That's just whataboutism
whimsicalism 4y ago
> - $10 billion to Reality Labs R&D in 2021 expected to increase annually will eat into earnings Seems like that is a knob that can be changed at any time to give more profit. > - Last year saw first ever decline in US Facebook user base, expected to continue shrinking (albeit slowly) Including instagram? Regardless, this was right after the pandemic, some people will switch from screens. > - Apple’s 2021 opt-in privacy change makes FB/Insta/Messenger/WhatsApp ads less effective permanently for the highest margin demographic (iPhone users) This will be worked around - the impact isn't as large as people make it out to be. > - Hugely negative public sentiment* hurts adoption and makes continued litigation headwinds likely Doesn't seem to really be hurting IG adoption that much. The real risk is litigation.
- Evan_Hellmuth 4y ago
  Agreed on all counts! Except US FB user decline slowing (not instagram, just FB). Add in WhatsApp’s under-monetization and some bullishness on VR and you’ve got my investment thesis.
  - ahahahahah 4y ago
    US FB DAU increased over the last quarter and US FB MAU is at an all-time high, I don't think there's even a "decline" to be slowing.
- WYepQ4dNnG 4y ago
  > - Apple’s 2021 opt-in privacy change makes FB/Insta/Messenger/WhatsApp ads less effective permanently for the highest margin demographic (iPhone users) > This will be worked around - the impact isn't as large as people make it out to be. And you think Apple will stay put and do nothing? You can expect that as soon as they find a work around, Apple is gonna screw them again. They have no chances.
  - whimsicalism 4y ago
    Depends on the work around. I don't think it is possible to get between app tracking data from some side channel, Apple will definitely block that through legal if not technical enforcement. But they can use data from Android to infer user behavior for Apple users. Also, they can still use tracking data from their own properties (IG, FB, Whatsapp).
aczerepinski 4y ago
I disagree about their being nothing nefarious. It took people years to realize the extent to which FB was tracking your outside-of-facebook activity. I would even guess that many still aren’t aware. Shadow profiles, etc.
- Evan_Hellmuth 4y ago
  We probably don't agree on tracking being nefarious. I'm personally just not concerned about being represented by a user ID in a database with info attached to it. Every service I've ever used has this on me and in general I trust US-run public companies with that level of data. Tech businesses more than most! Equifax leaked my personal info lol, no Silicon Valley companies have.
  - vlovich123 4y ago
    Counterpoint LinkedIn. It’s possible there have also been breaches that have been held under tighter wraps. I don’t necessarily disagree with the sentiment, just trying to provide some perspective.
  - Beaver117 4y ago
    Equifax leaked your social security number and some financial info. Facebook has much more valuable data about your deepest interests, browsing histories, intent, network, future goals and plans. In aggregate they know more about you than your family, parents, maybe even yourself. Sure it may never be leaked. But bits and pieces can leak out in the form of ads.
bun_at_work 4y ago
It doesn't seem fair to compare Facebook to the other companies you listed, with respect to negative public sentiment. People rightly criticize FB for the numerous scandals, data leaks, and lack of ethics, and as Zuckerberg runs the company, he deserves that criticism. It's one thing to buy the stock and be bullish, and another to turn a blind eye to the horrors this company has created. Youtube has it's problems, Google Search is going down the drain, and a ton of other websites run off ad revenue, yes. Those services are not responsible for organizing genocides, providing political analytics companies access to unauthorized data, or running unethical experiments on users to test their impact on the users' mental health.
- noslenwerdna 4y ago
  Facebook isn't responsible for organizing genocides, etc either. You might as well blame the telephone when criminals use it in commissioning a crime.
  - ASalazarMX 4y ago
    It's very responsible for building the hate echo chambers, though.
    - Evan_Hellmuth 4y ago
      Not sure I agree here. People love to blame social media for stoking hatred. Plenty of people use social media like... well, normal people. Life updates, baby pictures, levity. Some people don't. Social media is a mirror. People aren't zombies - you're not powerless before an omnipotent algorithm.
      - Qem 4y ago
        The problem is, hateful, outrageous content attracts clicks. It's a bug in human nature. Social media discovered it early by A/B testing, machine learning, whatever, and now is exploiting this bug for profit. At this point I think it's clear the algorithms of most big social media networks are biased towards this kind of content, spreading it and radicalizing people.
aklemm 4y ago
Missing point is that FB isn’t on-balance adding value to people’s lives. This is their downfall.
- impulser_ 4y ago
  Seems like it is if people are still using it despite the fact that the sentiment around the company has been negative for quite some time. 2.9b DAU.
- austhrow743 4y ago
  Do you think that FB is unique in being something that people use without adding value to their lives or do you think some form of reckoning is coming where people stop doing all of the things they do that don't add value to their lives?
  - asdff 4y ago
    Not the previous commenter but there will certainly be a reckoning whenever knowledge that social media is harmful reaches a critical enough mass. Like when cigarettes went from smoked by everyone everywhere to widely known to cause cancer and now its somewhat rare to even run into a cigarette smoker these days.
    - fauigerzigerk 4y ago
      I don't think "social media" is anywhere well defined enough to compare its effects with the link between cigarette smoke and cancer. It's far more difficult to prove specific effects of social media use, because it's so hard to separate it from all other social and economic dynamics of our time. There's no proper control group. The way in which different people use social media may well make all the difference between it being beneficial and being harmful. Social media is not a substance that has a specific effect regardless of how we use it as individuals and as a society. I think it's a mistake to expect social sciences to work like natural sciences. The smoking gun you're hoping for may never be found. The entire question could end up in the same basket as worries about the alleged harmfulness of reading novels or comic books, watching TV, watching porn or playing computer games. If anything "social media" seems even more vague than all of these.

redeux 4y ago

> there’s nothing particularly secretive or nefarious going on. Other than selling data and ads to foreign groups that use it for electioneering / sowing domestic discord. Minor detail though, I’m sure.

Evan_Hellmuth 4y ago
They don’t sell data, they let anyone who buys ads choose who the ads go to based on anonymized data. They also made it way harder to run political ads after public sentiment changed in 2016. You can go buy an ad from them right now. So can “foreign groups.” Neither of you will get access to anyone’s data. Same goes for YouTube, Twitter, Snap, etc. If you’re worried about “foreign groups” there’s this Chinese app called TikTok that knows everything about every American under 30 that no one seems to be concerned about.
- redeux 4y ago
  > They don’t sell data, they let anyone who buys ads choose who the ads go to based on anonymized data. You're using the current supposed state as if it excuses or negates previous behavior. It doesn't. Facebook has sold data in the recent past. https://www.bbc.com/news/technology-46618582 https://www.bbc.com/news/technology-46618582 > If you’re worried about “foreign groups” there’s this Chinese app called TikTok that knows everything about every American under 30 that no one seems to be concerned about. That's just whataboutism

whimsicalism 4y ago

> - $10 billion to Reality Labs R&D in 2021 expected to increase annually will eat into earnings Seems like that is a knob that can be changed at any time to give more profit. > - Last year saw first ever decline in US Facebook user base, expected to continue shrinking (albeit slowly) Including instagram? Regardless, this was right after the pandemic, some people will switch from screens. > - Apple’s 2021 opt-in privacy change makes FB/Insta/Messenger/WhatsApp ads less effective permanently for the highest margin demographic (iPhone users) This will be worked around - the impact isn't as large as people make it out to be. > - Hugely negative public sentiment* hurts adoption and makes continued litigation headwinds likely Doesn't seem to really be hurting IG adoption that much. The real risk is litigation.

Evan_Hellmuth 4y ago
Agreed on all counts! Except US FB user decline slowing (not instagram, just FB). Add in WhatsApp’s under-monetization and some bullishness on VR and you’ve got my investment thesis.
- ahahahahah 4y ago
  US FB DAU increased over the last quarter and US FB MAU is at an all-time high, I don't think there's even a "decline" to be slowing.
WYepQ4dNnG 4y ago
> - Apple’s 2021 opt-in privacy change makes FB/Insta/Messenger/WhatsApp ads less effective permanently for the highest margin demographic (iPhone users) > This will be worked around - the impact isn't as large as people make it out to be. And you think Apple will stay put and do nothing? You can expect that as soon as they find a work around, Apple is gonna screw them again. They have no chances.
- whimsicalism 4y ago
  Depends on the work around. I don't think it is possible to get between app tracking data from some side channel, Apple will definitely block that through legal if not technical enforcement. But they can use data from Android to infer user behavior for Apple users. Also, they can still use tracking data from their own properties (IG, FB, Whatsapp).

aczerepinski 4y ago

I disagree about their being nothing nefarious. It took people years to realize the extent to which FB was tracking your outside-of-facebook activity. I would even guess that many still aren’t aware. Shadow profiles, etc.

Evan_Hellmuth 4y ago
We probably don't agree on tracking being nefarious. I'm personally just not concerned about being represented by a user ID in a database with info attached to it. Every service I've ever used has this on me and in general I trust US-run public companies with that level of data. Tech businesses more than most! Equifax leaked my personal info lol, no Silicon Valley companies have.
- vlovich123 4y ago
  Counterpoint LinkedIn. It’s possible there have also been breaches that have been held under tighter wraps. I don’t necessarily disagree with the sentiment, just trying to provide some perspective.
- Beaver117 4y ago
  Equifax leaked your social security number and some financial info. Facebook has much more valuable data about your deepest interests, browsing histories, intent, network, future goals and plans. In aggregate they know more about you than your family, parents, maybe even yourself. Sure it may never be leaked. But bits and pieces can leak out in the form of ads.

bun_at_work 4y ago

It doesn't seem fair to compare Facebook to the other companies you listed, with respect to negative public sentiment. People rightly criticize FB for the numerous scandals, data leaks, and lack of ethics, and as Zuckerberg runs the company, he deserves that criticism. It's one thing to buy the stock and be bullish, and another to turn a blind eye to the horrors this company has created. Youtube has it's problems, Google Search is going down the drain, and a ton of other websites run off ad revenue, yes. Those services are not responsible for organizing genocides, providing political analytics companies access to unauthorized data, or running unethical experiments on users to test their impact on the users' mental health.

noslenwerdna 4y ago
Facebook isn't responsible for organizing genocides, etc either. You might as well blame the telephone when criminals use it in commissioning a crime.
- ASalazarMX 4y ago
  It's very responsible for building the hate echo chambers, though.
  - Evan_Hellmuth 4y ago
    Not sure I agree here. People love to blame social media for stoking hatred. Plenty of people use social media like... well, normal people. Life updates, baby pictures, levity. Some people don't. Social media is a mirror. People aren't zombies - you're not powerless before an omnipotent algorithm.
    - Qem 4y ago
      The problem is, hateful, outrageous content attracts clicks. It's a bug in human nature. Social media discovered it early by A/B testing, machine learning, whatever, and now is exploiting this bug for profit. At this point I think it's clear the algorithms of most big social media networks are biased towards this kind of content, spreading it and radicalizing people.

aklemm 4y ago

Missing point is that FB isn’t on-balance adding value to people’s lives. This is their downfall.

impulser_ 4y ago
Seems like it is if people are still using it despite the fact that the sentiment around the company has been negative for quite some time. 2.9b DAU.
austhrow743 4y ago
Do you think that FB is unique in being something that people use without adding value to their lives or do you think some form of reckoning is coming where people stop doing all of the things they do that don't add value to their lives?
- asdff 4y ago
  Not the previous commenter but there will certainly be a reckoning whenever knowledge that social media is harmful reaches a critical enough mass. Like when cigarettes went from smoked by everyone everywhere to widely known to cause cancer and now its somewhat rare to even run into a cigarette smoker these days.
  - fauigerzigerk 4y ago
    I don't think "social media" is anywhere well defined enough to compare its effects with the link between cigarette smoke and cancer. It's far more difficult to prove specific effects of social media use, because it's so hard to separate it from all other social and economic dynamics of our time. There's no proper control group. The way in which different people use social media may well make all the difference between it being beneficial and being harmful. Social media is not a substance that has a specific effect regardless of how we use it as individuals and as a society. I think it's a mistake to expect social sciences to work like natural sciences. The smoking gun you're hoping for may never be found. The entire question could end up in the same basket as worries about the alleged harmfulness of reading novels or comic books, watching TV, watching porn or playing computer games. If anything "social media" seems even more vague than all of these.