Meta Is Operationally Reactive

Meta Is Operationally Reactive

Below are two paragraphs from META’s earnings release. The language is from the “CFO Commentary” section and is symptomatic of a company that is operationally lax. It may be too late for META to find religion around operational excellence. Operational efficiency is a skill set that is developed over years, it is not a cost-cutting exercise. META is a publicly-traded venture investment fraught with risks including a questionable new product set (the Metaverse), a declining core business and a lack of an operational track record among senior management members.

From META’s 8K: “To provide some context on the approach we are taking towards setting our 2023 budget, we are making significant changes across the board to operate more efficiently. We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities. As a result, we expect headcount at the end of 2023 will be approximately in-line with third quarter 2022 levels.

We have increased scrutiny on all areas of operating expenses. However, these moves follow a substantial investment cycle so they will take time to play out in terms of our overall expense trajectory. Some steps, like the ongoing rationalization of our office footprint, will lead to incremental costs in the near term. This should set us up well for future years, when we expect to return to higher rates of revenue growth.

Full press release here:

  • The moment META got a whiff of the changes Apple was about to make to iOS with respect to Ad tracking, META ought to have taken the steps it references above.
  • The moment user growth started to slow, META ought to have taken the steps above.
  • If META were run properly, Zuckerberg and company would have stressed operational efficiency and excellence at inception.

As we have said before, META is a publicly-traded venture investment. To aggressively grow R&D as META has in an effort to chase the metaverse while Revenue is sliding was and is enormously risky. Meta is a work-in-progress. That is putting it kindly.

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