5 ms·

There Has to Be a Better Way to Lose $800B

14 points by marban 4y ago

Bubble_Pop_22 4y ago
This is how things should be. Meta is using all the huge FCF generated in the 2010s to propel the company to next leap. There should be mechanisms at the Govt. level to force CEOs to bet the company at least once per decade. I applaud Zuck, somebody has to push the envelope forward, and Meta is trying to unlock the future of work and home entertainment for 25B/yr with their Reality Labs. In a world where every CEO looks at governments mandated climate/COVID paranoia to leech off contracts and subsidies or outright transforms public companies into cults/political organizations , somebody has to think about how to elevate the quality of life of people, in a pragmatic and practical manner with new widgets, new platforms and new ways to work. I don't know if Reality Labs will ever be a success but the goal seems to be producing a leap as big as Windows 95. We could use some of that amongst this era where everything is about politics .
- asdajksah2123 4y ago
  Why do you think it's a good idea to "bet the company"? If Meta was to collapse, that would be extremely disruptive to everyone who currently uses their products. Many companies are able to pull off big bets without "betting the company". Apple does it all the time and usually succeeds. Google does it all the time and usually fails. The one time Google did "bet the company" (Google+) it was a disaster that made all their existing users' experiences worse.
  - Bubble_Pop_22 4y ago
    > If Meta was to collapse, that would be extremely disruptive to everyone who currently uses their products. You have to be willing to risk what you have in order to achieve the next leap and an even bigger vision. It's true for everybody ranging from individuals to countries.
    - yunwal 4y ago
      Why does every company need to look towards an "even bigger vision"? What happened to just running a company well without causing instability.
- tabtab 4y ago
  Meta could have purchased or cloned the concept of "Second Life" so that people can do VR with regular computer/TV screens. That's a much more approachable first step. When that catches on, THEN focus on physical 3D headsets. Screen VR is "good enough" and easy for users to try. Learn to walk before run.
  - birdyrooster 4y ago
    I have to say there is a wow factor the first time you use a Meta headset that just wouldn’t happen on screen vr, which could be what they saw as a major blocker to adoption.
    - tabtab 4y ago
      That might be true, but first, how many are going to actually try the headsets? Second, the 3D factor "gets old hat" over time, many say. It's like riding a roller coaster 50 times. The 51st becomes routine. (I've done it as a teen.)
syntaxing 4y ago
I’m hoping someone more knowledgeable on this can shed some light on this. Meta did not lose 800B. People who held Meta shares did. Meta from a fundamental point of view is still extremely solid (1B a quarter on net profit). Wouldn’t it be a great time for Meta to do some sort of buy back right now? Why would Meta care about the stock market price (for now since they have a sizeable runway and steady income)?
- octokatt 4y ago
  The trick is how stock is used by corporations. Namely: 1) Employee pay being partially in stock grants 2) Loans and funding being driven by stock grants The first is hard, because most of your employees just got a pay cut when inflation is already hitting hard. If your stock price drops this fast, a lot of employees are going to look around because you stopped paying them as much. Likewise, managers are going to be cranky about being paid less, cranky managers make for bad decisions, company culture starts suffering quickly. The second point sounds silly, when you think about how much cash inflow is happening. The trick is the balance of debt to assets in a company, and how badly that balance sheet changes when internally held stocks no longer have _close_ to the same value they did before. This translates on their 2021 10-K [0], which was published February this year because accounting. Their cash reserves and marketable securities both dropped, the latter by over $10B. That's not good when we're suddenly heading into a buyer's market for asset accumulation. They _could_ go for a buyback right now, but their cash on hand needs to _stay_ on hand, because their stock-derived liquidity is now worth vastly less. Particularly if they kept up with that giant rise in COGS (Cost of Goods Sold) -- they need to keep hitting R&D to make their new strategy successful. As of last year, Meta was rapidly amping up their COGS but revenue was matching, but those have stopped growing at the same rate. This is going to be a very messy correction. Buuuut I hate Meta, hate their complete lack of ethics, and want to watch them burn, so I'm going to keep reading their financial reports like a freaking nerd and giggling. [0]: https://www.sec.gov/Archives/edgar/data/1326801/000132680122000018/fb-20211231.htm#i0e2f35c4e2f2407493e331b6cc85a047_79 https://www.sec.gov/Archives/edgar/data/1326801/000132680122...
deleted 4y ago
[deleted]
ilrwbwrkhv 4y ago
Just a slow and steady death for Facebook.

14 points by marban 4y ago

This is how things should be. Meta is using all the huge FCF generated in the 2010s to propel the company to next leap. There should be mechanisms at the Govt. level to force CEOs to bet the company at least once per decade. I applaud Zuck, somebody has to push the envelope forward, and Meta is trying to unlock the future of work and home entertainment for 25B/yr with their Reality Labs. In a world where every CEO looks at governments mandated climate/COVID paranoia to leech off contracts and subsidies or outright transforms public companies into cults/political organizations , somebody has to think about how to elevate the quality of life of people, in a pragmatic and practical manner with new widgets, new platforms and new ways to work. I don't know if Reality Labs will ever be a success but the goal seems to be producing a leap as big as Windows 95. We could use some of that amongst this era where everything is about politics .

asdajksah2123 4y ago
Why do you think it's a good idea to "bet the company"? If Meta was to collapse, that would be extremely disruptive to everyone who currently uses their products. Many companies are able to pull off big bets without "betting the company". Apple does it all the time and usually succeeds. Google does it all the time and usually fails. The one time Google did "bet the company" (Google+) it was a disaster that made all their existing users' experiences worse.
- Bubble_Pop_22 4y ago
  > If Meta was to collapse, that would be extremely disruptive to everyone who currently uses their products. You have to be willing to risk what you have in order to achieve the next leap and an even bigger vision. It's true for everybody ranging from individuals to countries.
  - yunwal 4y ago
    Why does every company need to look towards an "even bigger vision"? What happened to just running a company well without causing instability.
tabtab 4y ago
Meta could have purchased or cloned the concept of "Second Life" so that people can do VR with regular computer/TV screens. That's a much more approachable first step. When that catches on, THEN focus on physical 3D headsets. Screen VR is "good enough" and easy for users to try. Learn to walk before run.
- birdyrooster 4y ago
  I have to say there is a wow factor the first time you use a Meta headset that just wouldn’t happen on screen vr, which could be what they saw as a major blocker to adoption.
  - tabtab 4y ago
    That might be true, but first, how many are going to actually try the headsets? Second, the 3D factor "gets old hat" over time, many say. It's like riding a roller coaster 50 times. The 51st becomes routine. (I've done it as a teen.)

syntaxing 4y ago

I’m hoping someone more knowledgeable on this can shed some light on this. Meta did not lose 800B. People who held Meta shares did. Meta from a fundamental point of view is still extremely solid (1B a quarter on net profit). Wouldn’t it be a great time for Meta to do some sort of buy back right now? Why would Meta care about the stock market price (for now since they have a sizeable runway and steady income)?

octokatt 4y ago
The trick is how stock is used by corporations. Namely: 1) Employee pay being partially in stock grants 2) Loans and funding being driven by stock grants The first is hard, because most of your employees just got a pay cut when inflation is already hitting hard. If your stock price drops this fast, a lot of employees are going to look around because you stopped paying them as much. Likewise, managers are going to be cranky about being paid less, cranky managers make for bad decisions, company culture starts suffering quickly. The second point sounds silly, when you think about how much cash inflow is happening. The trick is the balance of debt to assets in a company, and how badly that balance sheet changes when internally held stocks no longer have _close_ to the same value they did before. This translates on their 2021 10-K [0], which was published February this year because accounting. Their cash reserves and marketable securities both dropped, the latter by over $10B. That's not good when we're suddenly heading into a buyer's market for asset accumulation. They _could_ go for a buyback right now, but their cash on hand needs to _stay_ on hand, because their stock-derived liquidity is now worth vastly less. Particularly if they kept up with that giant rise in COGS (Cost of Goods Sold) -- they need to keep hitting R&D to make their new strategy successful. As of last year, Meta was rapidly amping up their COGS but revenue was matching, but those have stopped growing at the same rate. This is going to be a very messy correction. Buuuut I hate Meta, hate their complete lack of ethics, and want to watch them burn, so I'm going to keep reading their financial reports like a freaking nerd and giggling. [0]: https://www.sec.gov/Archives/edgar/data/1326801/000132680122000018/fb-20211231.htm#i0e2f35c4e2f2407493e331b6cc85a047_79 https://www.sec.gov/Archives/edgar/data/1326801/000132680122...

deleted 4y ago

[deleted]

ilrwbwrkhv 4y ago

Just a slow and steady death for Facebook.