META’s remake is no sure bet.
- The Facebook blue business is yesterday’s business. Its best attribute is that it generates significant free cash flow that may be deployed toward remaking the company.
- Instagram is in the process of being retooled. IG’s recommendation algos are being rewritten to more closely match TikTok’s – meaning users would see more content generated by users they do not follow.
- WhatsApp plays in a crowded field.
- VR/AR/Metaverse is no sure thing and will be an enormously expensive undertaking.
META bet the farm on a VR/AR/Metaverse future.
- The good news for investors is that the core Facebook business throws of plenty of cash flow such that META will have plenty of swings at the plate to get VR/AR/Metaverse “right”.
- The bad news is that it may take 10 years or more for META’s metaverse efforts to show an ROIC – if at all.
- What do you pay for a company with limited near-to-intermediate-term growth, rising expenses and an uncertain future? META is essentially a publicly-traded venture investment.