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Any shift from monetizing search via AdWords to monetizing single-answer responses via a chatGPT-like interface is going to involve major revenue disruptions.

by spaceman_2020 4y ago

Any shift from monetizing search via AdWords to monetizing single-answer responses via a chatGPT-like interface is going to involve major revenue disruptions. Meta is a great example. The company is still reporting exceptional revenue results, but because Mark is forcing the company in a new direction, the stock has been crashing since there is no more guaranteed revenue growth in the near future. Zuckerberg can still do it because he is a founder-CEO and the way the board is structured. If Google announces tomorrow that it’s shifting to a chatGPT-like model and will likely see revenue disruptions for the next N quarters, the stock will crash hard. Does Pichai have the pull to withstand quarter after quarter of declining revenue? I don’t think so.

agar 4y ago
The assignment of blame to VR/AR for Facebook's stock drop is mostly media noise and not reality. The "metaverse" term is cringeworthy, the technology is early and easy to critique, and the tech-savvy public hates Zuckerberg. All this combines to create easy click bait about how VR is leading to Meta's problems. In reality, Apple's changes to tracking in OS 14.5 has cost Facebook at least $10B in annual revenue and - far worse from an investment thesis perspective - likely continues to constrain growth for the foreseeable future. As a growth stock, this is poison. Yes, VR/AR investments are also $10B, but they can be turned off and there is a revenue stream coming from them today (at least 10M users, at least $500M in app store revenue) and a potential large market in the future. A $10B hit to annual revenue in perpetuity and growth cut from 36% to 12% is a far worse problem and a huge overhang on the stock. That story just doesn't get clicks though. You can't accompany that article with a stupid picture of Zuck's comical avatar in front of the Eiffel Tower and make jokes about missing legs in the metaverse.
- spaceman_2020 4y ago
  Meta's pivot to AR/VR is also influenced by Apple's changes. Zuck knows that if he wants to maintain growth, he needs to own a platform instead of merely renting it from Apple/Google.

agar 4y ago

The assignment of blame to VR/AR for Facebook's stock drop is mostly media noise and not reality. The "metaverse" term is cringeworthy, the technology is early and easy to critique, and the tech-savvy public hates Zuckerberg. All this combines to create easy click bait about how VR is leading to Meta's problems. In reality, Apple's changes to tracking in OS 14.5 has cost Facebook at least $10B in annual revenue and - far worse from an investment thesis perspective - likely continues to constrain growth for the foreseeable future. As a growth stock, this is poison. Yes, VR/AR investments are also $10B, but they can be turned off and there is a revenue stream coming from them today (at least 10M users, at least $500M in app store revenue) and a potential large market in the future. A $10B hit to annual revenue in perpetuity and growth cut from 36% to 12% is a far worse problem and a huge overhang on the stock. That story just doesn't get clicks though. You can't accompany that article with a stupid picture of Zuck's comical avatar in front of the Eiffel Tower and make jokes about missing legs in the metaverse.

spaceman_2020 4y ago
Meta's pivot to AR/VR is also influenced by Apple's changes. Zuck knows that if he wants to maintain growth, he needs to own a platform instead of merely renting it from Apple/Google.