Ok so I just be missing something obvious here but I don’t get the moat with this stock?
98% of their revenue comes from advertisement on their platforms. Not good. There is revenue growth but there’s only so many ads and so many people you can show ads to. Metaverse failed and they wasted $73B. Cool.
Raybans are a bright spot but haven’t moved revenue all THAT much. Apple and Google plan on releasing their own glasses soon. Yes, I know there is a market for all 3 to exit but METAs Rayban revenue not exploding when they are essentially the only players in the market rn is not good.
AI. Ok so They are spending billions on compute but what are they going to do with it? Google and Tesla are using compute for self driving cars and Gemini which will power Siri. I see robotaxis adding to revenue eventually although Waymo is not profitable yet. NVDA is Using AI for drug discovery and autonomous vehicles. But what is META doing with it?
How is all of this AI spend going to increase and diversify revenue. Are we just going to see AI ads everywhere and AI content on IG and FB?
My biggest gripe with META is the fact that people can easily just become bored with their platforms. Who’s to say in 10 years Instagram and FB aren’t cool anymore? Humans are always flocking to the next best thing. We’ve seen how Snapchat died.
It seems as though they keep throwing money at any and everything just to see what works and that is not good
What am I missing?
Can someone please help understand META?
byu/UnorthodoxShot instocks
Posted by UnorthodoxShot
29 Comments
They just sent out emails to all their paying customers of their only money making VR app that they were ceasing all development and updates to it. So I would guess they are ditching the VR thing, too.
I totally agree and I’ve been thinking about this a lot. Meta is not a vision company it’s a meme company.
Their **average** monthly revenue per US/CA user is $68.44. That includes most of us who never click an ad. Thats massive. All companies are ad companies at this point. Even Chrysler, Samsung, Roku and Walmart. Meta is the best one.
If ads fizzle out you’ll have like 95% of the S&P crash. What fuels earnings reports these days outside chips and ads? Can you imagine consumer companies just going back to their 5% profit margins? PEs will send the market down to 4000
They own the second biggest money printing machine. The only thing the investors hate is that they spend it on new projects instead of buybacks
Idk if you’re missing anything. I was a Meta investor for years, it was actually one of my biggest positions for a lot of last year. I sold everything in October and have no intention of touching it anytime soon.
Zuckerberg is leading the company purely on FOMO in the AI race. Their AI products are garbage compared to their competitors and seeing how he ruined the successful VR products to build something no one wanted it’s clear he’s not the visionary he thinks he is.
Here’s the quiet part said out loud: AI is existential for meta.
There is a good chance social media in its current form will not survive the tsunami of AI slop that’s going to hit it in 2026. Who would go to Instagram if every picture/reel you see could be AI, every picture of your friends is heavily doctored with AI, you literally cannot tell what’s real and what isn’t.
And now with grok undressing people who post on social media, people may even reduce posting on social media.
Overall, social media is going to have a reckoning with AI. Whatever is the AI era version of social media is, meta needs to own it. I think this is why they are frantically spending all that $$$.
Meta has 3.5 billion daily active users… Nearly half the planet is on instagram for 40 minutes a day, and you’re confused how they make so much money?
The moat is that if you come up with an innovative feature or app, Meta will just copy and integrate into their apps, like they did to snapchat and tiktok.
WhatsApp is a payment and digital call service dominant in much of Asia and South America. Most companies in the area list their WhatsApp number instead of their phone number. They basically are replacing credit cards companies and traditional phone companies at the same time.
Meta might not be worth its price now, but it is in every home for billions of people. The international use is hard for US based investors to understand.
There can be new players within a space but for the most part the existing social media networks have gotten to a “kind of too big too fall” situation. Unlike back when the internet is “still getting popular” around 15 or so years ago (digg/myspace days), smart phones has allowed people to just be connected all the time and created a situation where the giants of old are generally resilient. We see something like Twitter refusing to die, and the moment something big happens, like the Caracas attacks, people flood to twitter once again for their fix of the latest information.
FB sort of have a niche of connecting people within their family/friend circles, LindedIn for professional relationships, IG for daily pics, Twitter for random news/”more public announcements”, tiktok for short videos, etc.
While there may be some cool new thing that rolls around, getting your boomer parents to swap is going to be hard, and people might not want to reorganize everything and like everything in 1 place.
Why is 98% of revenues coming from ads not good? They have the most dominate social media platforms on the world
Meta has network effects and distribution. It’s really simple.
Meta cloned Snapchat and destroyed them. Meta cloned TikTok and managed to survive.
Also speaking from a YouTubers perspective. It’s like someone saying YouTube can be replaced. Yea good luck trying to steal all the creators who are getting paid decently from YouTube.
Why would anyone switch to some other platform unless they can pay more which newsflash they can’t beat them.
There was a tweet about saying Twitter should pay their creators more and Mr beast was like yea good luck doing that. YouTube has paid him 9 figures.
Instagram doesn’t pay people last time I checked. But zuck wanted to they could easily do it and keep the creators there.
I don’t understand how people can be so bullish on Google and YouTube and then shit on Netflix and meta. Like dude they both operate on the same moats. Network effects and distribution.
Meta does have a problem and does need to diversify their business though. I’ll agree with that.
They’re the only FAANG company that’s still a one trick pony. Netflix is moving into advertising and merch and licensing and experiences.
Their ads are the best in the business by miles
I would not bet on their hardware at all. They won’t beat Apple or Google or Amazon. They are the weakest of the Mag 7 (I don’t even consider Tesla ad one) as social media is a fickle business. Sure they are a cash cow now but 10-20 years from now?
They make insane, ludicrous amounts of money from ads. That’s really all there is to understand.
Ads run the economy, and have done so for over a century. First in print. Then in TV. Now digitally, where Google and Meta capture over half of all ad spend on the entire planet. And that number is growing every single year. It’s clear at this point that AI increases engagement and retention on social media. Which means more ad revenue.
I don’t think people really grasp that in a nutshell social media is purely just a Frankenstein experiment that tech companies created which trades your time (and eyes to watch ads) for little hits of dopamine to keep you doing so. And they’ve perfected it. The average person will stop watching tv.. stop their current task.. stop pretty much anything just to look or respond to their social media posts.
It’s about as big of a moat as you can ever get. There’s over ten thousand social networking apps, yet 99.999% of people all use the same handful. You can’t just go somewhere else if none of your friends are.
I will assume you are in the western world and folks in the western world have no idea how essential WhatsApp is to daily life and small and medium businesses in large swathes of Asia, Africa, SAmerica and GME. It is a necessary part of the toolkit for any business and WhatsApp monetization has barely started.
You just forgot WhatsApp!
They have a ton of users and are getting into eBay and YouTube’s biz. They will not be going away anytime soon.
You’re greatly underestimating the profitability of the ad market. How do you think Google makes money? Media companies? Why do you think athletes are paid what they are? It’s the best business to be in really.
I’m confused by your question on revenue from ads . Speaking as a marketer , they have the most powerful algorithm for performance marketing . You want to sell and generate a positive return on investment on your product ? You advertise on Meta , no other social platform offers that.
The problem is you don’t need META.
You can text, email, call, etc people in your circle.
You can create groups and send photos and status updates.
You can play games with each other.
And you can find out information about businesses around you via their websites.
And yet people still use their trash platforms. I’m a developer and I deleted all my social media but I doubt the average joe will even when it’s not needed because we fucking just love to judge and stalk people we know.
META to 1000.
I personally don’t believe in the company. They are behind in AI. Facebook is slowly dying. They have WhatsApp and Instagram, which are good, but still. I also don’t believe in their VR stuff. I just steer clear of them personally. GOOGL for me.
2 billion users with accounts. More than Google.
Basically u disrupt the agency business and take over. Coca Cola would go directly to meta without an agency in the mix.
Privacy AI will end META ad revenue.
Apple (iMessage) and Signal started E2E messaging. Today WhatsApp and FB messenger still use Signal protocol.
Apple is now launching Private AI with Gemini. Same with Signal founder (Confer Confidential Compute).
In 10 years all AI will be privacy first which kills ads.
What’s the purpose of this question when you are clearly not going to invest in it
Meta has marketplace
It’s way overbought though.
Lot of Meta bulls in the comments but i would suggest you read more into the psychology of the actual company, and its founder
It’s important to remember Zuckerburg never intended to create Facebook it was a combination of pure luck, being in the right place at the right time and the theft of other peoples ideas
Had Zuckerberg been left to his own devices in the early stages the company would likely not exist today it survived several knife edge moments primarily navigated by others within the business
Zuckerberg didn’t even want to run Ad’s it was again someone else pushing him into it
This is a founder who although technically gifted has repeatedly shown very very poor strategic thinking and has repeatedly been rescued by a miracle or saviour
They’ve also aggressively tried to monopolise the social media space which bought them more time but i do not see social media holding the same amount of attention in 10-20 years
In short i believe at some stage this companies luck could run out he may even end up selling it
You’re missing forward strategic looking vision. This is why CEOs get paid millions and you don’t.
Think about the top companies got to where they are.
Microsoft had the vision to see that computers would usher us into the digital age. They created the PC.
Apple realized the future was mobile smartphone. Their iPhone took them from middling computer company to the super company we see today.
Google saw the future of the internet and realized we would need a hub.
Meta foresaw the rise of social media and entertainment and created the platform to share it. Then they had the vision to monetize it with targeted ads.
These all seem obvious in retrospect but in the moment it requires tremendous vision, commitment and risk.
Currently we have no idea what the next 20 years will look like just like 20 years ago nobody thought we’d be walking around with mobile phones talking to LLMs and sharing short form videos.
The giants take huge gambles to get the “next big thing” right. They use their current capital and revenue streams to take these risks. Meta is uniquely positioned because they have solid revenue and a lot of different business lines to explore.
Lastly you’re missing what makes Meta ads the best, the moat is enormous and cannot be understated. They basically created targeted ads. It revolutionized everything. Before you threw up an ad in a magazine or billboard and maybe 5% of eyeballs cared and 99% of eyeballs that would have cared didn’t see it.
Now Meta basically monetized AI and ML before it was cool by processing all the data they were getting from their platforms to get these ads to the exact people who wanted to see them. Now their ads go to people who are interested, and you don’t see ads you don’t care about. Now every ad curated for the user with incredible CTR. It changed everything and nobody in the world has the level of data and user understanding Meta has.
Facebook, Instagram, and WhatsApp are 3 of the 4 most popular social networks worldwide.
Doesn’t mean it’s not expensive but it explains why it’s so expensive.
this sub said facebook would die 5 years ago. look at it now, daily active users still show that it’s growing
what makes you think snapchat died? or do you have main character syndrome and just because you don’t use it, they must be dying? they’re clearly growing still too (international adoption and growth has been abundant)