Daily Brief: Meta’s Still Straggling Behind Its Younger, Cooler Rivals

Daily Brief: Meta’s Still Straggling Behind Its Younger, Cooler Rivals

over 1 year ago3 mins

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Meta gave a disappointing earnings update late on Wednesday, so Zuckerberg might well be pinning more hopes on his metaverse marvel than ever before.

What does this mean?

After Snap and Alphabet’s disappointing results over the last week, investors saw the writing on the wall for other ad-reliant companies, and Meta did nothing to prove them wrong. The social media titan brought in 4% more monthly active users across its platforms last quarter than the same time last year, but that didn’t bring the big bucks: the average price paid per ad dropped by 18%. Plus, Meta’s Reality Labs segment – which heads up all the firm’s ambitious metaverse advancements – made half the revenue it made this time last year, and racked up bigger losses too. That meant Meta’s overall revenue fell 4%, the company’s second-straight quarterly decline, while profit fell an eye-watering 52%. And don’t expect that to change anytime soon: Meta muttered a worse-than-expected revenue outlook for this quarter too. Investors flocked to the “unfriend” button, and sent its shares plunging 17%.

Meta profit
Source: Meta

Why should I care?

For markets: Metaverse megabucks.

Once the coolest kid around, Meta’s shares are now down nearly 70% this year – a bigger drop than its hip and happenin’ tech peers. That might be because investors aren’t fully sold on its new-age metaverse venture: Meta’s dedicated division has racked up around $30 billion in losses in just three years, after all, and Horizon Worlds – the firm’s flagship VR app – is losing users as well as street cred. So in a bid to hedge their bets in case the metaverse dream doesn’t quite pay off, some shareholders want Meta to rein in its metaverse spending to just $5 billion a year.

Meta stock
Source: Google Finance

The bigger picture: Brain power, schmain power.

Meta mightn’t be holding back on the metaverse yet, but it’s sure cutting back in some areas: the social media giant announced plans late last month to slash jobs for the first time since the company was founded in 2004. But with fewer heads to put together, the ones staying put will need to work extra hard if Meta wants to stop rivals like TikTok stealing the rest of its users.

Keep reading for our next story...

Mobileye Hit The Stock Market

Mobileye image

Intel’s self-driving tech company Mobileye debuted on the stock market this week.

What does this mean?

Mobileye’s driver-assistance tech is already embedded in over 125 million vehicles, and that number’s only set to grow as the car industry cruises toward a fully automated future. Keen to cash in on those bright prospects, Intel announced plans late last year to list the company on the stock market. And while souring market sentiment scuppered plans for other initial public offerings (IPOs), Intel pushed ahead in selling a cautious 5% stake. That vigilance paid off: despite its shares selling above its target range, valuing it at $17 billion, that sum was a far cry from the $50 billion it set its sights on earlier in the year.

Intel Mobileye

Why should I care?

The bigger picture: Jesus, take the wheel.

The driverless car industry isn’t quite where it wants to be, with Tesla boss Musk admitting last week that full self-driving software still needs a driver behind the wheel. Look at Cruise: the autonomous vehicle company tests its robotaxis on quiet roads at night, showing the general cautiousness in the industry right now. But with McKinsey estimating that over $100 billion has been invested in driverless cars since 2010, companies are clearly plucky about the technology’s future.

For markets: Initial Puny Offerings.

IPOs in the US have raised a measly $22.5 billion in 2022, a trifling sum compared to the $279 billion raised at the same point in 2021. That means Mobileye’s slim listing is still a highlight, clocking in as the fourth biggest this year. Things look unlikely to change anytime soon either, with scheduled IPOs dropping like flies: Instacart, for one, reportedly called off its highly-anticipated listing earlier this month after its valuation was cut for a third time.

US IPOs
Source: PwC
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