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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 poin

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...

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...