Mark Zuckerberg with a big W
The “metaverse firm,” formerly known as the uncontested social media juggernaut Facebook, is coming off of what was perhaps its worst year since its founding in 2004. The severity of the equity depreciation at Meta Platforms, Inc. since the year’s beginning has been terrible and historically significant at the same time. It kicked out the year by releasing a highly problematic earnings report that identified a number of basic problems with the company model. As a result, in just one after-hours trading session, the then-$900 billion business saw more than $200 billion in equity destroyed.
This was only the first indication of all the issues for Meta shareholders given that it happened at the outset of a long-overdue stock market fall that has only lately begun to match itself with the larger macroeconomic tendencies. The firm achieved a negative 62.28% year-to-date return after the floodgates were opened, drastically underperforming the S&P 500 (SPY) for the first time in years. Meta is currently trading for a little more than $128.10 per share at the time of writing this article.
The founder and CEO of Meta, Mark Zuckerberg, approached the stage to present the most recent advancements in his Metaverse project in these extremely challenging circumstances for the business and with his already-damaged reputation on the line. Many analysts and investors were taken aback by the company’s quick and fairly unexpected swing into the sector. Mark had invested billions of dollars in a pet project, which investors believed would at worst cause capital loss and at best be naively decades early into a successful industry.
In our piece from June, “Zuckerberg Might Be Right About The Metaverse After All,” we got the opportunity to talk about the terrible tale of Meta’s erosion of shareholder value. Then, we looked at Mark’s pet project in an effort to depict ourselves as the Devil’s Advocate giving the other viewpoint. An intriguing value proposition emerged as a result of Mr Market’s treatment of Meta and the way market sentiment changed in only a few quarters. This continues to be a concern in our opinion, and the intriguing series of events has only helped to further solidify our conviction that Meta is still fundamentally undervalued and has sizable upside potential.