Meta evaporated 1.5 trillion yuan, the Metaverse will not be bought, what is the capital market worried about?

Meta’s future rival is Apple?

Xiao Zha may not have thought that after Facebook changed its name to Meta, the story of the Metaverse did not impress the capital market, but instead put himself into a dilemma of difficult to complete the pie and capital sell-off. 

A few days ago, the financial report released by Meta showed that the FRL division of Meta Metaverse Strategy lost more than 10 billion US dollars in the past year. Meta closed down 26%, and its market value has shrunk by more than 230 billion US dollars, which is about 1.5 trillion yuan in RMB, setting a record for US stocks. The largest drop in market value in the history of the market. 

Meta evaporated 1.5 trillion yuan, the Metaverse will not be bought, what is the capital market worried about?

Obviously, behind the Meta crash, on the surface, the Metaverse story of Meta is not bought by the capital market, but from the perspective of internal factors, the capital market may have seen that Meta’s basic social stock and advertising revenue basic business suffered a double-line crisis. , which may mean that Meta’s good days in the advertising market are coming to an end. 

Behind the Meta plunge

Judging from Meta’s quarterly report data, its revenue was $33.67 billion, exceeding analysts’ expectations of $33.4 billion, but the slowdown in growth was very obvious. 

In addition, the daily active users and monthly active users did not meet expectations. Its monthly active users were 2.91 billion, which was lower than analysts’ expectations of 2.95 billion. Its daily active users fell for the first time in 17 years. 

The number of daily active users of Meta Platforms in the fourth quarter of 2021 was 1.93 billion, which fell short of the 1.95 billion expected by Wall Street analysts. 

Meta evaporated 1.5 trillion yuan, the Metaverse will not be bought, what is the capital market worried about?

According to Meta’s quarterly report, Facebook lost about 500,000 daily active users in the fourth quarter of 2021 compared to the previous quarter. 

Zuckerberg explained that due to the weak revenue outlook in the first quarter, it is currently important to focus on the growing Facebook short video product. He said the company faced “unprecedented competition” with the rise of short-video platform TikTok. 

Of course, the short video threat is part of the reason, and Apple’s privacy policy is another factor that affects meta advertising revenue. 

In April last year, Apple adjusted its privacy policy and implemented the ATT (App Tracking Transparency) function. If an app wants to obtain and process Apple user data, it must obtain the user’s consent. Apps listed on the App Store must comply with this privacy policy, including Facebook of course. 

In December last year, Apple further adjusted its privacy policy. The Financial Times said that social platforms including Snap and Facebook are allowed to share user information from the iPhone. However, this data needs to be anonymized and aggregated, and not linked to specific associated with the user profile.

The impact of this is that advertisers will not be able to track the performance and method of social advertising in a complete and real-time manner, which has led to a blow to the targeted advertising business models on Snap and Meta’s Instagram and Facebook that precisely target users.

In short, Apple’s privacy policy reduced the effectiveness of targeted advertising on Facebook and Instagram , and also affected Meta’s future advertising revenue expectations. 

According to Meta’s forecast, its first-quarter revenue was about $27 billion to $29 billion, far below Wall Street’s forecast of $30.1 billion. 

Meta has lost about $10 billion in revenue since Apple introduced its new privacy policy last year. But more important is future expectations. 

From the perspective of future trends, based on the impact of Apple’s privacy policy, advertisers may reduce the delivery of social ads, and may be more inclined to seek other digital advertising models. To make matters worse, macroeconomic conditions such as inflation and supply chain disruptions are also affecting advertisers’ budgets. 

On the other hand, with regard to Facebook’s stagnant user growth, the prevailing view is that its user base is aging, growth in its home market has declined, and there are no new countries to expand into. On the one hand, there is the competitive pressure of Tik Tok. 

Of course, these are external and objective factors that are visible to the naked eye. A survey by research firm Forrester found that in 2021, the number of 12- to 17-year-olds in the United States will use TikTok more than Instagram every week. 

But the internal reason is that Facebook’s product innovation is lacking, it is unable to grasp emerging social trends, and its attractiveness to young people is declining. 

And this decline in attractiveness didn’t happen in the last year or two, it had symptoms many years ago.

Reports show that since 2011, news of teenagers fleeing Facebook has been reported on Facebook. In 2013, there were also data showing that Facebook’s active users in the UK and the US were declining by millions per month. In 2020, foreign media reported that Facebook users in the United States and Canada are losing… 

In the past, Facebook mainly through a series of acquisitions and imitation strategies to prevent the loss of social market users.

For example, the acquisition of Instagram and whatApps, and later with the rise of Snapchat, Facebook began to imitate Snapchat again. This strategy has a certain effect and also delayed Facebook’s risk exposure. 

Until the emergence of Tik Tok – Tik Tok is a company that Facebook can’t acquire and can’t rely on imitation to beat. This has left Facebook in unprecedented anxiety. 

From the current point of view, Meta’s social market is still very stable, and its total number of users has reached 2.82 billion. After all, the skinny camel is bigger than the horse, plus it’s investing more in shortsightedness, like Reels. 

But the trend of user churn has Facebook very concerned, after Facebook researchers shared a statistic in an internal document that the number of teenage Facebook users in the United States has fallen by 13% since 2019 and is expected to decline in the next two years. 45%. 

Therefore, in order to cover up the dilemma of user growth, the Metaverse, which has spent a huge amount of investment (consumed tens of billions of dollars in the past year) and is expected to continue to lose money, is the future that Meta hopes to show investors. 

Meta’s future rival is Apple?

However, the reality is still skinny. FRL’s huge losses have caused the stock price to plummet, and some investors are leaving. 

And Zuckerberg’s Metaverse world needs VR equipment to support — including running a modified version of Google’s Android mobile operating system on Oculus and future virtual reality devices. 

In other words, facing the impact of short videos, Zuckerberg’s Metaverse is essentially to create a VR version of the social network to re-attract young people.

But in VR, Meta could face a threat from Apple. 

Analysts have reported that Apple’s first mixed-reality headset could hit the market as soon as this year, and it’s unlikely to be a mass-market budget device. 

Meta’s position in the virtual reality space has been recognized for a long time thanks to the acquisition of Oculus and the success of the Oculus Quest. 

But Apple’s headset could clearly take a toll on Oculus’ market share, and the stock’s slump suggests that Apple may already be leading the way in some technologies. This means that the Metaverse of Meta itself, which has an uncertain future, will also face a deeper crisis. 

Because from a practical point of view, Meta wants to build a Metaverse platform, and it is still inseparable from the hardware layout with VR equipment – Oculus as the core. The “Horizon Worlds” that Facebook opened to North America before is the prototype of its Metaverse. The user needs to use the Oculus Quest 2 headset to create the character. 

Meta evaporated 1.5 trillion yuan, the Metaverse will not be bought, what is the capital market worried about?

Zuckerberg has previously stated, “We hope that within the next decade, the Metaverse will reach 1 billion people, carry hundreds of billions of dollars in digital commerce, and provide employment opportunities for millions of creators and developers.” 

The Metaverse wants to cover 1 billion users, and in short, it wants to achieve 1 billion VR hardware sales. In addition, the creation of a Metaverse, in addition to the layout of a large number of underlying technologies, requires a large number of content creators, developers, consumers, various types of B-side companies, sellers, intermediaries, etc. to join in to create the underlying operations. The system ecology is the hardest.

But Meta’s existing Oculus devices run on a custom version of Android called VROS. 

In short, Meta has no autonomous underlying operating system.

Apple will obviously run its own customized operating system on the upcoming VR/AR head-mounted device. The industry speculates that it may be called rOS. Apple can obtain a more powerful and stable system through the binding of the underlying system + hardware + application store. Performance experience and revenue.

Therefore, from the perspective of software and hardware strength and technology, Apple is more competitive in the Metaverse. In other words, if Apple enters the game, although Facebook has a first-mover advantage in the Metaverse field, it does not have the leading capabilities and revenue expectations. 

Undoubtedly, in the eyes of investors, it is not realistic to achieve Meta’s goal in the short term. The loss of 10 billion is just a drizzle. The Metaverse is a bottomless pit with disproportionate input and output, and it is also a place with no end in sight. gamble. 

Judging from the imagination of the Metaverse in the industry, Meta does not yet have the ability to build and construct a complete Metaverse, and this cannot be solved by spending money in the short term. 

What are the capital markets worried about?

Therefore, judging from the future growth curve and expectations, the capital market chose to vote with its feet. 

From the perspective of the entire conception system of Metaverse, it includes network and computing power technology, artificial intelligence, cloud computing, 3D vision, AR augmented reality, blockchain, digital twin, Internet of Things, edge computing nodes, DPU, etc.; Sensors, chips, VR headsets, brain-computer interfaces, smart glasses, etc. 

The economic and rule elements it introduces are much more complex than the mobile Internet, including the introduction of virtual currency, the establishment of an economic system, the labor and rule system that supports the Metaverse, and how to establish an effective governance policy. 

As such, the Metaverse is currently just a marketing concept until the various technologies that support the construction of the Metaverse are immature. But even if the Metaverse Era arrives, it is hard to say whether this era belongs to Meta. 

Because the capital market is panicking, it is not just that Meta’s Metaverse profit expectations are far away and its future rival, Apple, is stronger, but that its real crisis is already very serious.

Apple’s crackdown on online advertising, on the one hand, will continue to bring downward expectations for Meta’s advertising revenue. On the other hand, TikTok is competing for young users. Whether it is user retention or advertising revenue, Facebook faces a two-way blow. 

On the plate of digital advertising, Facebook, Google and Tik Tok are all competitors on the same plate. 

It stands to reason that the rise of Tik Tok has affected both Facebook and Google, but Google’s advertising business is still strong. Before the Meta plunge, Google’s parent company Alphabet released better-than-expected results, driving the stock price up more than 7%. 

The divergence in the stock prices of Meta and Google reflects that market sentiment differs from expectations on the growth prospects of their advertising businesses.

The reason behind this is that Google’s search advertising is undertaken by the stable platform of the Android system, and it is less dependent on the privacy policy of iOS devices. To this end, advertisers have also invested more of their budgets in Google, rather than Meta – Google has become a diverter and beneficiary under Apple’s privacy policy.

As an SNS company based on the relationship chain, Facebook’s main source of profit is still advertising based on the user relationship chain and information flow, so it will be highly dependent on the growth of users. Shake the fundamentals of facebook. 

If a global social network has not yet reached the peak of new users and there is still room for growth in the global market, its users stop growing and start to show a trend of losing users, which may mean that its social network is losing the demand for young people. Insights, whose social fundamentals are facing an uncertain future. 

At the same time, Meta’s core competitiveness in the advertising market comes from gathering a large number of retained users and occupying a large amount of user time, thereby selling targeted advertisements to advertisers. 

The rapid growth of Facebook in the past few years stems from the fact that more and more advertisers prefer to occupy more user time through the social platform to match specific advertisements and services. 

This means that Facebook has always had excellent precise positioning and user conversion capabilities, which is one of the core capabilities that advertisers value.

If Meta’s ability to accurately target and convert users suffers due to Apple’s privacy policy, it will undoubtedly hit the revenue capacity of its core hinterland and its attractiveness to advertisers, which may also mean the core of its social advertising. The hinterland will also face the impact and future of uncertainty. 

Not surprisingly , Meta’s biggest plunge in the history of US stocks may not be the end, but the beginning. To some extent, the biggest slump in the history of US stocks may mean that the biggest crisis moment in Facebook’s history is coming. 

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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