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It's really hard for me to understand how Meta makes so much money, and why the stock is growing so fast. I wonder how analysts come up with such high valuation

It's really hard for me to understand how Meta makes so much money, and why the stock is growing so fast. I wonder how analysts come up with such high valuation (or maybe they don't and it's just an AI bubble?). Meta isn't diversified and their products are clunky and buggy. How long will they be able to maintain their profit? are they capable to come up with something revolutionary enough to replace their profitable products?

ripped_britches 2y ago
So far it seems like they’re continuing to kick butt. If required, I think they can move pretty quickly to write/rewrite just about anything. Not sure how the future will be, but I’d count on Meta being the largest company in the digital socialization space for decades.
- ethbr1 2y ago
  Most people don't want new or best, they want easy. Meta is decent at easy. And there's unlikely to be much pushback from the new administration if they want to buy any competitor who appears.
jncfhnb 2y ago
Ads
threeseed 2y ago
It doesn’t sound like you understand what Meta is. They are an advertising company that uses apps to drive traffic and collect data. And along with Google they dominate the space and are continuing to grow at a rapid pace. Whether their apps are clunky and buggy is irrelevant when their advertising platform isn’t. And they will be able to maintain this profit for decades because most businesses are very reluctant to take risks with a profitable channel to market.
- bxhxj7 2y ago
  What people have to pay attention too is Ad Prices. They are proxy for how much Attention is available in the world that Corporations/People are willing to pay to capture. It has been going up for past 3 years and cannot go up forever given the competition in the online ad market with Amazon, Walmart, Netflix, OpenAI etc all rolling out their own Ad biz. There is nothing predictable about what happens to Meta.
  - threeseed 2y ago
    The bread and butter for Meta/Google is global small business advertising. And so none of the channels you listed apply. Also it's very easy to build an Ad biz. It's very hard to build one that is competitive.
    - bxhxj7 2y ago
      Whatever channel Just pay attention to ad prices. They have been going up on all channels. Being a platform allows them to squeeze people. Only for so long . Before something gives. And the tipping point will be seen when Ad prices plateau or start dropping. Like home prices rhey cant go up forever because just like Land the pool of Attention is fixed.
- yodsanklai 2y ago
  > Whether their apps are clunky and buggy is irrelevant when their advertising platform isn’t. Still relevant because ultimately ads show up on these app, and users may eventually migrate to other products. Also relevant because it may shows their inability to write new products.
vFunct 2y ago
To give an idea why, I’ll present to you my own business case study. I just bought $7,000 in ads at Meta for 2 months, for my retail clothing store that has 4 employees. We don’t even sell online. We are pure brick-and-mortar retail. I expect revenue to be 4x-10x that for that time those ads run. Whenever I buy ads on their platform, it’s always that kind of result. It’s better than my Google search ads because fashion isn’t something you necessarily seek to solve a problem. It’s something that someone else convinces you should buy. Meta has billions of people staring all day on their platform, and they have ways for me to easily target the exact person that would buy our clothes, even if they aren’t searching for it. I could do marketing in other ways, but this is the laziest, easiest way. And I’ve done things like direct mail and video ads and posters. I just have a full time engineering job and this is my side hustle. Fashion marketing is a lot of work, and Meta makes it easy. And I believe there are millions of small businesses like mine that Meta is effectively taking advantage of. I know people in my exact fashion market of mom-and-pop clothing stores, some doing part time in their homes, some with small retail shops, doing the same thing of hitting “Boost” on their Instagram or Facebook posts. You don’t need to be LVMH to market fashion with Meta. It really does work at the micro-level.
- victor106 2y ago
  Interesting. I see much less returns for a side hustle fashion brand. how much time do you invest in creating the ads? which platform do you use? Instagram or Facebook? or any others?
  - vFunct 2y ago
    I use both. General Instagram marketing and for Facebook I create sale events and boost that. There’s definitely a quality and established brand effect. If you have more content on your page or if you have better photos, your CPC are cheaper. I try not to spend more than a day a month on marketing.
  - pksj763 2y ago
    Because its not possible mathematically. Those who pay more get the boost for the same target audience everyone else is trying to capture. Notice it has nothing to do with quality of product or service. Just who pays the Platform more. If you are not getting attention. The platform tells you to pay more for it or that you be more engaging. This has nothing to do with product being sold. Its classic middle man monopoly behavior. People cant do anything about it because its a system wide problem with a platform economy.

ripped_britches 2y ago

So far it seems like they’re continuing to kick butt. If required, I think they can move pretty quickly to write/rewrite just about anything. Not sure how the future will be, but I’d count on Meta being the largest company in the digital socialization space for decades.

ethbr1 2y ago
Most people don't want new or best, they want easy. Meta is decent at easy. And there's unlikely to be much pushback from the new administration if they want to buy any competitor who appears.

jncfhnb 2y ago

Ads

threeseed 2y ago

It doesn’t sound like you understand what Meta is. They are an advertising company that uses apps to drive traffic and collect data. And along with Google they dominate the space and are continuing to grow at a rapid pace. Whether their apps are clunky and buggy is irrelevant when their advertising platform isn’t. And they will be able to maintain this profit for decades because most businesses are very reluctant to take risks with a profitable channel to market.

bxhxj7 2y ago
What people have to pay attention too is Ad Prices. They are proxy for how much Attention is available in the world that Corporations/People are willing to pay to capture. It has been going up for past 3 years and cannot go up forever given the competition in the online ad market with Amazon, Walmart, Netflix, OpenAI etc all rolling out their own Ad biz. There is nothing predictable about what happens to Meta.
- threeseed 2y ago
  The bread and butter for Meta/Google is global small business advertising. And so none of the channels you listed apply. Also it's very easy to build an Ad biz. It's very hard to build one that is competitive.
  - bxhxj7 2y ago
    Whatever channel Just pay attention to ad prices. They have been going up on all channels. Being a platform allows them to squeeze people. Only for so long . Before something gives. And the tipping point will be seen when Ad prices plateau or start dropping. Like home prices rhey cant go up forever because just like Land the pool of Attention is fixed.
yodsanklai 2y ago
> Whether their apps are clunky and buggy is irrelevant when their advertising platform isn’t. Still relevant because ultimately ads show up on these app, and users may eventually migrate to other products. Also relevant because it may shows their inability to write new products.

vFunct 2y ago

To give an idea why, I’ll present to you my own business case study. I just bought $7,000 in ads at Meta for 2 months, for my retail clothing store that has 4 employees. We don’t even sell online. We are pure brick-and-mortar retail. I expect revenue to be 4x-10x that for that time those ads run. Whenever I buy ads on their platform, it’s always that kind of result. It’s better than my Google search ads because fashion isn’t something you necessarily seek to solve a problem. It’s something that someone else convinces you should buy. Meta has billions of people staring all day on their platform, and they have ways for me to easily target the exact person that would buy our clothes, even if they aren’t searching for it. I could do marketing in other ways, but this is the laziest, easiest way. And I’ve done things like direct mail and video ads and posters. I just have a full time engineering job and this is my side hustle. Fashion marketing is a lot of work, and Meta makes it easy. And I believe there are millions of small businesses like mine that Meta is effectively taking advantage of. I know people in my exact fashion market of mom-and-pop clothing stores, some doing part time in their homes, some with small retail shops, doing the same thing of hitting “Boost” on their Instagram or Facebook posts. You don’t need to be LVMH to market fashion with Meta. It really does work at the micro-level.

victor106 2y ago
Interesting. I see much less returns for a side hustle fashion brand. how much time do you invest in creating the ads? which platform do you use? Instagram or Facebook? or any others?
- vFunct 2y ago
  I use both. General Instagram marketing and for Facebook I create sale events and boost that. There’s definitely a quality and established brand effect. If you have more content on your page or if you have better photos, your CPC are cheaper. I try not to spend more than a day a month on marketing.
- pksj763 2y ago
  Because its not possible mathematically. Those who pay more get the boost for the same target audience everyone else is trying to capture. Notice it has nothing to do with quality of product or service. Just who pays the Platform more. If you are not getting attention. The platform tells you to pay more for it or that you be more engaging. This has nothing to do with product being sold. Its classic middle man monopoly behavior. People cant do anything about it because its a system wide problem with a platform economy.