The assignment of blame to VR/AR for Facebook's stock drop is mostly media noise and not reality. The "metaverse" term is cringeworthy, the technology is early and easy to critique, and the tech-savvy public hates Zuckerberg. All this combines to create easy click bait about how VR is leading to Meta's problems.
In reality, Apple's changes to tracking in OS 14.5 has cost Facebook at least $10B in annual revenue and - far worse from an investment thesis perspective - likely continues to constrain growth for the foreseeable future. As a growth stock, this is poison.
Yes, VR/AR investments are also $10B, but they can be turned off and there is a revenue stream coming from them today (at least 10M users, at least $500M in app store revenue) and a potential large market in the future.
A $10B hit to annual revenue in perpetuity and growth cut from 36% to 12% is a far worse problem and a huge overhang on the stock.
That story just doesn't get clicks though. You can't accompany that article with a stupid picture of Zuck's comical avatar in front of the Eiffel Tower and make jokes about missing legs in the metaverse.
Meta's pivot to AR/VR is also influenced by Apple's changes. Zuck knows that if he wants to maintain growth, he needs to own a platform instead of merely renting it from Apple/Google.
In reality, Apple's changes to tracking in OS 14.5 has cost Facebook at least $10B in annual revenue and - far worse from an investment thesis perspective - likely continues to constrain growth for the foreseeable future. As a growth stock, this is poison.
Yes, VR/AR investments are also $10B, but they can be turned off and there is a revenue stream coming from them today (at least 10M users, at least $500M in app store revenue) and a potential large market in the future.
A $10B hit to annual revenue in perpetuity and growth cut from 36% to 12% is a far worse problem and a huge overhang on the stock.
That story just doesn't get clicks though. You can't accompany that article with a stupid picture of Zuck's comical avatar in front of the Eiffel Tower and make jokes about missing legs in the metaverse.