Neil Campling, global TMT analyst at Mirabaud Equity Research, says:
Despite all the ‘evil empire’ press reports on the company, the whistle-blower claims, the various governments’ opinions from influential politicians and general mudslinging from many – Facebook’s user base and engagement across its platforms remains stellar.
The name change announced on Thursday at the developer conference to ‘Meta’ shows exactly where Facebook is focusing on the next substantial digital platform opportunity. But what’s in a name, you might ask? They are putting their money where their mouth is. Facebook told us on the Q3 conference call that the company is changing its reporting structure and will break out Facebook Reality Labs (FRL) as a separate business unit from next quarter. And we know that investments are expected to be around $10bn in this division for 2021, and revenues will be closer to $3bn. So, essentially, we are looking at this new segment as losing around $7bn of EBIT this year and is likely to move higher next year. But it also shows that the sheer scale of these investments is significantly higher than any other company in this area, and Facebook is making a significant commitment to a new future. Some companies may focus on either the hardware segment of the Metaverse (HP, HTC) or the software (Epic Games, Roblox) but Facebook’s all-encompassing platform approach is designed for the Metaverse to be a destination of choice where users can spend their entire digital lives of the future.
