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Facebook's revenue could cut in half and they could easily make more profit than they did this quarter just by getting rid of reality labs. The only thing holdi

Facebook's revenue could cut in half and they could easily make more profit than they did this quarter just by getting rid of reality labs. The only thing holding the stock back at this point is Mark and I guess the fear that no one will use facebook 20 years from now.

hustwindmaple1 4y ago
Getting rid of reality labs, then what? Be a sitting duck and getting attacked by Tiktok/Apple left and right? They have basically no moat now. VR is prob. the only thing that remotely looks promising for META now.
- colinmhayes 4y ago
  Facebook still has 3 billion daily users. For all the doom and gloom it’s doing fine. Yes it’ll probably slowly fade into history but that will take decades.
  - kevinventullo 4y ago
    That doesn’t make for a compelling buy signal. In principle, you should buy a stock because you believe you will be repaid in dividends over time. If the ship is sinking, even slowly, those dividends are not terribly appealing.
  - samatman 4y ago
    By the end of the decade people will feel about Facebook the way they feel about Game of Thrones. Vaguely remember when it was a big deal, but not why.
    - ethbr0 4y ago
      This undervalues Facebook's social network moat, which is honestly what they should be leaning into: a more interactive Yellow Pages / local groups directory. That's much harder for competitors to disrupt, especially when you give people tools to amass and customize content on their pages. E.g. wiki's, info, etc.
      - samatman 4y ago
        There's no moat. Inertia isn't a moat. Source: I've re-spanned my social graph several times since Usenet. It's fine. People aren't corporations.
- badpun 4y ago
  By that logic, Google has even less of a moat? I mean, anyone with money can just make a decent search engine.
jsnell 4y ago
How do you reckon that? Back of the envelope, their profit in your scenario should be about (revenue - COGS) / 2 - (fixed costs - fixed cost of reality labs) Their revenue was $27.5B with COGS $5.7B vs. fixed costs of $16.3B. The cost of reality labs was $3.8B, let's assume for simplicity that it was all fixed costs. Plug those numbers into the formula, and it'd be a $2.5B loss. If their revenue was cut in half, they'd need to slim down massively in the non-RL segments to even break even, let alone be more profitable than now.

hustwindmaple1 4y ago

Getting rid of reality labs, then what? Be a sitting duck and getting attacked by Tiktok/Apple left and right? They have basically no moat now. VR is prob. the only thing that remotely looks promising for META now.

colinmhayes 4y ago
Facebook still has 3 billion daily users. For all the doom and gloom it’s doing fine. Yes it’ll probably slowly fade into history but that will take decades.
- kevinventullo 4y ago
  That doesn’t make for a compelling buy signal. In principle, you should buy a stock because you believe you will be repaid in dividends over time. If the ship is sinking, even slowly, those dividends are not terribly appealing.
- samatman 4y ago
  By the end of the decade people will feel about Facebook the way they feel about Game of Thrones. Vaguely remember when it was a big deal, but not why.
  - ethbr0 4y ago
    This undervalues Facebook's social network moat, which is honestly what they should be leaning into: a more interactive Yellow Pages / local groups directory. That's much harder for competitors to disrupt, especially when you give people tools to amass and customize content on their pages. E.g. wiki's, info, etc.
    - samatman 4y ago
      There's no moat. Inertia isn't a moat. Source: I've re-spanned my social graph several times since Usenet. It's fine. People aren't corporations.
badpun 4y ago
By that logic, Google has even less of a moat? I mean, anyone with money can just make a decent search engine.

jsnell 4y ago

How do you reckon that? Back of the envelope, their profit in your scenario should be about (revenue - COGS) / 2 - (fixed costs - fixed cost of reality labs) Their revenue was $27.5B with COGS $5.7B vs. fixed costs of $16.3B. The cost of reality labs was $3.8B, let's assume for simplicity that it was all fixed costs. Plug those numbers into the formula, and it'd be a $2.5B loss. If their revenue was cut in half, they'd need to slim down massively in the non-RL segments to even break even, let alone be more profitable than now.