Date: 07/20/2023
Author: Mr. X
Don’t count out Mark Zuckerberg.
It wasn’t long ago when it looked like Meta Platforms (META) was simply done. Facebook, in short, is no longer cool. Congress and the press were unloading on the company after a whistleblower accused it of not doing enough to censor – I mean, uh, moderate and provide “safety” – enough when it came to user content. The metaverse completely collapsed, making the name change sound ridiculous. Even the name change itself looked like an obvious attempt to simply change the topic away from political scandals.
The potential for trouble hasn’t gone away. The House Judiciary Committee, led by Jim Jordan (R-OH), is reportedly considering holding Mark Zuckerberg in contempt of Congress (this time, for doing too much censoring). Threads, the supposed Twitter-killer, has fallen apart soon after launch, with dramatic declines in the numbers of people using the app. Facebook, well, still isn’t cool.
Nontheless, Meta Platforms is clearly recovering. Zuckerberg’s dedicated (and some would say ruthless) cost-cutting measures have accomplished their purpose, though it cost about 21,000 jobs. Earnings were $2.98 per share in the most recent quarter, compared to $2.91 expected. Revenue was slightly ahead of projections, at $32 billion. Daily and monthly active users were ahead of what was expected, and revenue per user was well ahead of expectations. Year-over-year growth is about 15% on revenue.
Mark Zuckerberg called it a good quarter and said there was strong engagement across all apps. “We have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall.”
Reality Labs continues to lose billions of dollars – yet the company can afford that. As cold-blooded as it sounds, it is better that the company is losing billions on something that could bring in future growth rather than simply just trying to maintain its workforce. When Quest 3 comes out, we may begin to see some returns for the billions that have been spent thus far. With better chips (and considerably thinner), it could be a breakthrough device.
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Zuckerberg, unlike Elon Musk, has shown relentless focus when it comes to his core business, without giving up on growth. Despite engaging in some political showmanship after the 2016 election, he’s stuck to safe political territory. He hasn’t picked fights, unlike Musk, even as he builds his brand. And he’s survived the most serious political crisis thus far. Even if the GOP goes after Meta Platforms, that may not cost him much, given that the press and corporate America want him to censor more, not less. Martyrdom in the cause of “safety” could work for him. The same is true of Threads, which already has an impressive user base even if initial enthusiasm has faded.
Meta Platforms is already accomplishing what Musk dreams of with X – serving as the hub of a large network of apps and services that businesses are going to find indispensable. More importantly, Zuckerberg has shown the will and determination to survive a crisis that would have ended previous executives. Unlike Musk, he’s also overcome his most serious political crisis. Meta Platforms has been underestimated before, as has Zuckerberg. No one should be so foolish as to do that again.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing
