![]() He ostensibly knows it better than anybody. Now, hey, listen, Zuckerberg has run this business forever. When you see your revenues dropping for the second consecutive quarter, and their costs exploding and their profits dropping, their free cash flow going to almost nothing compared to nine billion a year ago, it just really sends a signal to the investing community of a lot of concern and doubt about what's going on with Meta. Their core business is suffering, meanwhile, they're making these massive investments and they have not yet seen the payoff and there's a lot of doubt among the investing community.Īltimeter Capital which has been very vocal on trying to get Meta focus again. ![]() Now, they expect that to trend down over the year as they right-size the people, their employee base, but still the investments that Zuckerberg is making into the Metaverse and this was a lengthy conversations about the call, the returns on that, what are they going to get from that? When is it going to show up? Are they being distracted from their core business that is also suffering? As we know, the advertising market is under a lot of struggle from what we saw recently from Google and some others, Snap certainly, or Alphabet and Snap. Their operating expenses for the year they think for 2023, Chris, will be somewhere in the 96-101 billion range versus 85-87 billion this year. As a percentage of revenues, they are investing heavily into the Metaverse and into their people. It was 30 percent last quarter normally that's much more in like the low 20 percent level. That's the highest it's ever been as far as I can remember and can find. What really caught my eye, Chris, is the research and development expenses this quarter came in at 33 percent of revenue. That's the lowest that I can remember their operating margin being at least for years. But I was just looking through some of the data, and you guys will talk a lot about this I'm sure on Friday, but with the actual results, the operating margin down to 20 percent from 36 percent a year ago. Those investments absolutely affected their third quarter results and shares of Meta are down more than 20 percent today.Īndy Cross: Chris, if you think about the investments that they're making, this has been an ongoing story even though they're talking about rightsizing their employee base. Chris Hill: We're going to dig into this more on Friday show, but I did want to get your thoughts on Meta platforms because that company continues to invest heavily in building out the Metaverse.
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