Is Mark Zuckerberg a visionary who has correctly identified the Next Big Thing in tech? Or was Facebook — despite the skill with which Zuckerberg developed it — a one-off success that will be hard to replicate? The share price implosion at what is now called Meta reflects scepticism over whether pressures on its core businesses can be offset soon, if ever, by the founder’s costly bet on the metaverse, a form of immersive internet. Investors are angry, too, at their inability to constrain Zuckerberg from burning through billions of dollars in pursuit of his goal. They have only themselves to blame. They knowingly bought into a dual-class share structure that allows the Meta boss, with 13 per cent of the equity, to control more than half the votes.
Last week’s brutal sell-off of technology stocks followed earnings that showed just how much inflation and a slowing global economy are starting to crimp growth in their main engines of digital advertising and ecommerce, while even a promising new market like cloud computing is not immune. Investors also balked at spiralling costs and capital spending.
Meta epitomises those concerns, its shares down by three-quarters from a 2021 peak. While Amazon, Google and Apple have developed a portfolio of business streams, Meta still relies too heavily on social media platforms that are facing stern competition for younger users from TikTok. Changes to Apple’s iPhone privacy controls that made targeted advertising more difficult have hit ad revenues at Facebook and Instagram. Meaningful returns from Zuckerberg’s venture into the metaverse look as far off as ever, with the $9.4bn losses from that division in the first nine months of this year expected to be even higher in 2023.