Among the big tech MAMAA stocks, Facebook draws the most flak from people. Government loves to sue it, people love to criticise it and competitors love to attack it.
Now…
Facebook is voted as the worst company in Yahoo! Finance survey.
Despite this, Facebook is the most populous place on Earth with 2.89 billion active users per month. Perhaps, hate is the price to pay when Facebook arrived in this position, because it attracted enough haters (and jealous competitors / governments) who are vocal enough to oppose it.
The reasons for hate in a Yahoo! survey were contradicting. One group complained there’s too much censorship and an obstruction to free speech. Another group blames Facebook for insufficient policing of undesirable content.
With 2.89 billion active users, the diversity is more than what any government has experienced before. Great power comes great responsibility.
I love Facebook as an investor and entrepreneur. It has a powerful business model where you can mint billions out of human attention that doesn’t belong to the company.
The media used to have this power until digital advertising come into play. The biggest difference was scale. Newspapers, radio and TV are typically limited by geographical bounds. While Google and Facebook are not.
Small medium enterprises, especially the B2C ones, can be very dependent on Facebook as a means to get customers. There are very few choices otherwise.
Over 10 million businesses (and growing at a 26% CAGR) actively spend on ads on Facebook. It is not dependent on a few advertisers.
Some say that Facebook is facing a lot of competition. I think the real competition is with Google because of its dominance in search and increasingly YouTube too.
Facebook has shown its ability to ward off new competitors in the past. It acquired Instagram when it was a threat. Likewise for WhatsApp. Snap refused to be sold and Instagram copied ‘Stories’. Now everyone copies TikTok’s short videos. Twitter, Reddit, Discord and the smaller players have their own cliques but have struggled to generate big ad revenue.
Isn’t it bad to invest in a hated company or something that is ‘undesirable’ to society?
You will realised many big companies aren’t that ‘desirable’ if you judge them based on what is good for society.
- Is selling sugared water healthy for people?
- Is selling high calories low nutrients fast food or processed food good for people?
- Isn’t selling crude oil damaging to the environment?
It is endless debate.
Every investor has a different level of tolerance so to each his own.
Facebook’s biggest risk would be its relevancy going into the future.
It has to remain an attractive space for users to come back regularly to sell attention to advertisers. And social media tends to be stratified by generations.
- Boomers use YouTube.
- Gen X use Facebook.
- Gen Y use Instagram.
- Gen Z use TikTok.
- Primary School goers use Roblox.
- Toddlers use YouTube.
Hence, Facebook’s move to metaverse is a must. It is a bid of survival to stay relevant.
Facebook isn’t a sure winner in the metaverse.
There are other big techs going into it. And the decentralised world of crypto will fight to prevent the control by any company.
Facebook has to muscle its way into the hardware business (which it has failed with Facebook phone) with Oculus as an interface between IRL and the metaverse.
This is to reduce the threat of hardware kings like Apple who may harm Facebook ad business with certain policies.
My take as an investor
It is hard to be totally objective and unbiased in investing. The bias can be for or against a company and it reflects in the way we invest. But I ain’t bothered by Facebook being voted as the most hated company.
