The market value of Meta has evaporated by 1.5 trillion yuan in a single day, which should not be simply attributed to the Metaverse

Analyzing the essence, the two cores supporting the development of Meta, the number of social network users and advertising revenue are both in severe crisis, and the cracks in the foundation of Meta’s “building” cannot be concealed.

Guided reading

Behind the collapse of Meta, the surface is that its Metaverse story is too far away and too expensive to be bought by the capital market, but the analysis of the essence, the two cores supporting the development of Meta, the number of social network users and advertising revenue are both in severe crisis. The cracks in the foundations of Meta’s “building” cannot be concealed. 

When you read these words, it means that the balance of vacation is running out. The content of this article, I planned before the Spring Festival, was originally to sort out those market trends and news events that are easily overlooked in the AIoT field in 2021. 

However, changes always come faster than plans. When I started writing, the editor-in-chief of Zhicifang asked me a question of reining in the precipice. She said: Many people think that the bubble of the Metaverse has burst, you don’t write the first Meta (formerly Facebook) Is the topic of a huge loss in the Metaverse financial report? 

Looking at the news in the past few days, “Metaverse collapse? Meta plummeted historically, and its market value has evaporated by 230 billion!”, “Zuckerberg’s ‘angry crying’: Meta has made huge losses in the Metaverse, and its stock price has plummeted, and its market value has evaporated by more than 200 billion. Dollars!” and other headlines are particularly eye-catching. 

However, these statements inevitably lead to misunderstandings. The logical fallacy lies in the strong correlation between the evaporation of Meta’s market value and the Metaverse, and the failure of the Meta Metaverse layout.In fact, the collapse of Meta’s stock price this time is a concentrated explosion that has planted many mines over the years, and the responsibility cannot be simply placed on the Metaverse.

On the one hand, the success of a technology company depends on whether it represents the trend of technology and whether it operates well. On the other hand, the influence of Wall Street on her should not be underestimated. In 2000, when Microsoft was at its peak, a reporter asked Bill Gates: Who is Microsoft’s main competitor now? Gates replied that it was Goldman Sachs of Wall Street. The opponent Meta met this time also came from Wall Street. 

Wall Street will set revenue and profit expectations for each technology company. When a company’s profit falls short of expectations, it may be severely suppressed by Wall Street. In order to meet Wall Street expectations, some companies, such as Lucent, even rely on legal means to cheat. 

Meta reported weaker-than-expected earnings on Wednesday. 

According to the financial report, Meta’s revenue in the fourth quarter was US$33.671 billion, an increase of 20% compared with US$28.072 billion in the same period of the previous year; net profit was US$10.285 billion, a decrease of 8% compared with the net profit of US$11.219 billion in the same period of the previous year. . Although revenue is still growing, the key point is that Meta’s daily active users and monthly active users are not up to expectations. 

In the fourth quarter of last year, Meta Platforms had 1.93 billion daily active users (1.95 billion expected) and 2.91 billion monthly active users (2.95 billion expected). It was the first quarterly decline in daily active users on the platform on record.Add to that Meta’s “Metaverse” division has lost more than $10 billion in the past year… 

This triggered a large-scale sell-off in the market. Meta’s stock price plummeted 26.44% on Thursday, and its market value shrank by US$234 billion, equivalent to about 1.5 trillion yuan, setting a record for the largest single-day shrinkage of a single stock in the history of US stocks. 

Behind the collapse of Meta, the surface is that its Metaverse story is too far away and too expensive to be bought by the capital market, but the analysis of the essence, the two cores supporting the development of Meta, the number of social network users and advertising revenue are both in severe crisis. The cracks in the foundations of Meta’s “building” cannot be concealed. 

Existing articles have deeply analyzed the 6 major dilemmas facing Meta, including: peaking user growth, Apple’s privacy adjustment hitting Meta’s advertising business, Google eroding Meta’s online advertising market share, encountering super rival TikTok, huge investment in the Metaverse, and swaying Do not go to the antitrust shadow. I won’t go into details here. 

A truly competitive company with excellent management capabilities should be able to withstand multiple financial crises or pressure from the capital market. 

Today’s intractable dilemma of Meta is not a one-day accumulation, and there are indeed loopholes in the layout of the Meta Metaverse. This article attempts to make an analysis, which may allow us to better view the development of the Metaverse. 

Meta’s Metaverse layout lacks a moat

The market value of Meta has evaporated by 1.5 trillion yuan in a single day, which should not be simply attributed to the Metaverse

Buffett often likes to emphasize the importance of a “moat” in his letters to investors: “You don’t forget that running a business is like defending a city. You should first consider digging a deep trench to keep thieves out of the castle… We don’t necessarily have to With the ability to kill a dragon, as long as you avoid it, you can do a good job.” 

Literally, a moat is a river-dependent fortification built to defend against enemy attacks. A corporate moat is a barrier that prevents competitors from entering the market to ensure that the company can continue to create value and continue to earn profits. 

As a CEO, you should be responsible for everything that happens in this company, and even more responsible for what should happen in this company, but it doesn’t happen. 

Where is Meta’s moat? Why Apple’s Privacy Policy Adjustment Can Hit Meta Hard? 

Last year Apple rolled out an “App Tracking Transparency” update in iOS, which essentially allows iPhone users to choose whether or not to have apps monitor their online activity. 

It stands to reason that both Meta and Google’s advertising business should suffer, but Google’s advertising is still strong.Shares rose more than 7 percent after Google parent Alphabet posted better-than-expected results. 

Why hasn’t Google been hit hard? 

Because Google holds both the Chrome browser and the Android operating system, and has comprehensive data from products such as Google Maps and YouTube videos, it is less dependent on the privacy policy of iOS devices. This time, Google has become one of the beneficiaries of Apple’s privacy policy. 

It’s not that Zuckerberg didn’t see the important strategic role of operating systems and browsers, and it’s not that he didn’t try to transform himself from a social networking site to an infrastructure provider of the Internet, but ultimately failed. 

First, it’s an attempt at the Meta smartphone.

In 2013, Meta launched its first smartphone with the Facebook Home app for $450. However, due to poor sales, the phone began to drop in price a few weeks after it was on the shelves, and it ended dismal. 

The idea of ​​Facebook Home is very clear. It integrates all the social elements of Meta into the first screen, and all operations revolve around the user’s social interaction. Other behaviors of people using mobile phones, including working, searching, and taking pictures, have become subordinates outside of social networking. That is to say, Facebook Home, which occupies the fold, puts social needs above the basic functions of mobile phones, and it “blocks” other functions of the phone. 

As a result of Meta’s neglect of user needs, users have no need for this smartphone. 

More than just socializing, people need their smartphones to do a lot of different things; similarly, people need the Metaverse to be able to meet all kinds of needs. 

But Meta’s “social-first” strategy seems to be unchanged. 

Secondly, Meta has also tried to develop its own operating system.

In 2019, Meta announced that they were developing their own operating system, commissioning Microsoft Windows NT co-developer Lukowski to build it from the ground up in an attempt to wean itself off Android and iOS. But little news has come out since. 

Until January 2022, foreign media reported that Meta would stop developing the operating system in November 2021, and the 300-person project team was suspended. Lukovsky quickly joined Google in December last year as a senior Google AR engineering and operating system. Director. 

Lukovsky’s choice was rational. Although Meta’s ability to develop an operating system is undeniable, the difficulty lies in the ecosystem, and Meta is hopeless in this regard. 

This is a company that is adept at using dominant power to copy, acquire, and stifle any company that poses a competitive threat to its business. Building an ecosystem requires a willingness to accommodate and support rival applications or services, which Meta lacks. 

As we will see later, in the construction of the Metaverse ecology, Meta is eating its own consequences. 

Third, has Meta tried to diversify its services beyond just limiting itself to social media? It seems not.

Social, social, social. Meta has been bolstering its social media presence through acquisitions and copycat strategies. 

Such as the acquisition of Instagram and WhatsApp, and later, with the rise of Snapchat, Meta began to imitate Snapchat again. This strategy has certain effects. Until TikTok came along, a company that Meta could neither acquire nor simply imitate, Meta was plunged into unprecedented anxiety. 

Today, Meta’s social media status is shaken, not in the last year or two, but there are signs of it many years ago. 

There have been reports of teenagers fleeing Meta since 2011. 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. The number of Facebook teen users in the U.S. has fallen 13% since 2019 and is expected to drop 45% over the next two years… 

In order to solve the dilemma that the core business was severely damaged and unable to recover, Meta spent a huge amount of investment to bet on the Metaverse, which is a desperate gamble. I still remember that in the days when Facebook announced that it had changed its name to Meta, there were already several articles analyzing that it was more of an “evasion” of the company’s many scandals at the time. 

Meta’s failure in smartphones and operating systems is understandable. Many giants, including Microsoft, Amazon… have suffered the same Waterloo. However, Meta’s lack of product innovation, inability to grasp emerging social trends, and the fact that its appeal to young people is declining makes the capital market intolerable. 

Importantly, from the failure of smartphones and operating systems, it is not difficult to see that Zuckerberg’s cognition of what the Internet and mobile Internet are flawed: not aiming at user needs, but aiming to embed their own services, It is impossible to get user word of mouth. 

People always repeat the past uncontrollably, and Zuckerberg is no exception.

Facing the Next Generation Internet: The Metaverse, Meta’s failure mode in the field of smartphones and operating systems is still repeating itself. Zuckerberg has neither the ability to grasp the underlying infrastructure of the Metaverse, nor out of the narrow vision of social media to improve A big heart can meet people’s various needs.

It is difficult for Meta to occupy the C position of the Metaverse

The market value of Meta has evaporated by 1.5 trillion yuan in a single day, which should not be simply attributed to the Metaverse

Many companies have gone through name changes. For example, Google changed its name to Alphabet. Through restructuring, it showed the outside world that its business scope has far exceeded the original search engine. Alphabet is a collective. 

But the Facebook rebrand was different. After the name change, Meta is both a company name and a corporate vision, which also means that if it cannot occupy the C position in the Metaverse, Meta is likely to lose its footing. So many people think of Meta as synonymous with the Metaverse, but it’s not. 

What Zuckerberg expects is to open up a new social model through the Metaverse, cover “1 billion users” in the next technological era, “and support hundreds of billions of e-commerce markets”, and continue to occupy the ecosystem created by Facebook in the past. bit. 

It is hoped that it will be supported by strength. The hidden dangers of Meta in the layout of the Metaverse make it still far from the C position. 

First of all, Zuckerberg did not try to use the advantages accumulated in the social media field to become an open service capability to translate and expand to the largest range of third-party Metaverse terminal hardware. It is wishful thinking that virtual reality will be the mainstream computing platform in the future, trying to create a VR version of social network to attract young people. 

Meta acquired Oculus as early as 2014, thus becoming the world’s largest VR hardware manufacturer. Meta’s position in the field of virtual reality has always been recognized. Oculus co-founder Brendan Iribe has left Meta amid controversy over the next generation of computer-based virtual reality headsets. Oculus has now been renamed Meta Quest. 

Some analysts believe that Quest’s “attack” can be an Apple in the field of virtual reality, and “defense” can prepare for the next social era. But there is still a third possibility, that Quest’s offensive and defensive strategies are lost.

If Meta can make its own VR device replace Apple’s position in smartphones, it will undoubtedly increase its valuation significantly. But starting from the reality of Facebook as an app is too far out of reach, and it’s no wonder that some analysts see the move as a bottomless drain. 

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.” 1 billion users, in short, is to achieve 1 billion VR hardware sales, which cannot be done by a company called Meta. But previous acquisitions of Oculus have made it hard for other VR hardware companies not to see Meta as a competitor. 

Andrew, head of Facebook Reality Labs (FRL), the Meta Metaverse Division, was once asked “Is it possible that the Quest store is compatible with other VR devices?”, he said helplessly, “I also hope that the developers of the Quest store can use more VR devices and There are ways to increase profitability, but there are currently no VR headsets that are willing to be compatible with the Quest store, so FRL has no way.” 

Referring to the history of smartphone competition, who can succeed in the field of VR and AR smart terminals does not depend on the time of product release, but on the depth of cognition of the product.

Today, both Apple and Google have made the development of head-mounted display devices one of their top priorities, and contrary to Meta’s perception, Apple does not want AR headsets to become “all-weather devices”, but hopes that consumers can leave when they run out, only limited to short-term use. With the advent of Apple products next year, it may have an impact on Meta Quest’s market share. 

Secondly , the establishment of the Metaverse ecosystem is the most difficult part, which requires a large number of content creators, developers, consumers, software and hardware companies, and merchants to actively join and provide support. 

Meta’s existing headsets run on a custom version of Android, and even without its own underlying operating system, Meta could potentially run a thriving app store. 

However, it’s hard to come back, and some VR startups and developers say Meta is undermining competition in the VR market. 

Meta copied competitors’ ideas and made it difficult for some apps to function properly on its platform. Typical victims are BigScreen, whose founder and CEO Darshan disclosed that when users rent movies on BigScreen, they must use the Quest in-app purchase and enforce a 30% rental fee. “It’s impossible for anyone to have an e-commerce or media business in VR because it’s a walled garden, and there are people watching the door,” he said. 

Third, people want to accomplish various tasks in the Metaverse, not just socializing. Meta has previously been so focused on the 2C consumer market that it’s hard to see that the company has a culture of being a 2B enterprise platform. 

Social networking is counterintuitive, just as VR is counterintuitive. We rarely plan when we turn on our social networks, but we do plan when we work and when we sleep. Therefore, Zuckerberg’s idea of ​​immersing users in the virtual world in the Metaverse is essentially to replace and escape real life, but not to enhance and beautify real life, and it is also counterintuitive. 

Now that people typically spend eight hours a day at work, Meta has also started rolling out Workrooms, an enterprise-focused app. 

Simply put, Workrooms are virtual meeting spaces and allow employees in any physical location to collaborate remotely.You can participate as an avatar in virtual reality, and you can enter from a PC via a video call. 

In order to broaden the application in work scenarios, Meta has tried to cooperate with a number of technology companies. The most eye-catching is that Meta and Microsoft announced that they have broken through the barriers between Workplace and Microsoft Team, and can mutually access enterprise software content. 

However, Meta has always been a company in the 2C field, and its accumulation in the 2B enterprise field is lackluster, with neither email nor office system. Even if Meta is willing to start from scratch in the enterprise field, it is difficult to build an organizational gene that provides 2B enterprise services from scratch. 

write at the end

Although Meta’s various “getting out” measures have been frequent recently, its thinking mode seems to be deeply ingrained. In the mobile Internet era, everything starts from social networks, and in the Metaverse era, everything starts from the virtual world, and then builds based on this basic starting point. Hardware, app stores and business models. 

The bad news for Meta is not out yet, and there may be a risk of further declines. It is also possible that the Metaverse will encounter a cold winter in the future, but the two are not necessarily connected. 


1. Meta suffered a historic crash, how to solve the six major dilemmas? Source: Phoenix Network Technology 

2. Kai-Fu Lee: The most important thing in the future is not the operating system, but the browser. Source: Sohu 

3. Famous analyst Ben Thompson: Facebook is doing VR, what is the problem? Source: 36Kr 

4. Meta, by Ben Thompson, source: Stratechery 

5. Meta evaporates 1.5 trillion yuan, the Metaverse will not be bought, what is the capital market worried about? Author: Wang Xinxi, Source: Sohu 

Posted by:CoinYuppie,Reprinted with attribution to:
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