Facebook’s financial numbers show that killing the Metaverse could be profitable. To explain, Facebook (FB) is doing a little better after the Metaverse’s death.
The media proclaimed the Metaverse’s death in Mid-May 2023. Interestingly, Meta’s (FB) revenues started growing again in the quarter ending on 31 March 2023. In comparison, Meta’s revenues fell by -4.47% in the quarter ending on 31 December 2022.
In contrast, Meta’s revenues grew by 6.64% in the quarter ending on 31 March 2022. Consequently, Meta’s quarterly revenues grew from $27.908 billion on 31 March 2022 to $28.645 billion on 31 March 2023. Conversely, the quarterly revenues rose to $32.165 billion on 31 December 2022.
However, Meta is making less money. Meta’s quarterly operating income from $8.524 billion on 31 March 2022 to $7.227 billion on 31 March 2023. Conversely, Meta’s quarterly gross profit grew from $21.903 billion on 31 March 2022 to $22.537 billion on 31 March 2023.
When did the Metaverse die?
I don’t think the Metaverse was ever a real thing. However, Meta (FB) CEO Mark Zuckerberg believes in it. Meta’s Reality Labs (the entity in charge of the Metaverse) lost almost $24 billion in 2021 and 2022, The Street estimates.
In contrast, Zuckerberg is creating a “top-level product group at Meta focused on generative AI.” Hence, ChatGPT has spooked Zuckerberg and scared him out of the Metaverse.
One reason the Metaverse died is Meta’s cash drain. Notably, Meta’s cash and short-term investments fell from $43.89 billion on 31 March 2022 to $37.439 billion on 31 March 2023.
Plus, Meta (FB) is generating less cash. For example, Meta’s cash flow fell from $14.076 billion on 31 March 2022 to $13.998 billion on 31 March 2023. Similarly, Meta’s quarterly ending cash flow fell from $15.353 billion on 31 March 2022 to $12.42 billion on 31 March 2023.
Meta (NASDAQ: FB) is still a cash-rich company, but it has far less cash. Zuckerberg loves cash and hates the idea of losing it. Hence, the Metaverse died.
Is Meta (FB) Losing Money?
Meta (FB) is in better shape than many people assume. For instance, Meta has less debt. Meta’s total debt fell from $14.658 billion on 31 March 2022 to $9.925 billion on 31 March 2023.
Hence, Meta paid debts while spending $24 billion on the Metaverse. That shows a healthy company. Paying that debt is expensive. Meta reported a quarterly financing cash flow of -$10.516 billion on 25 May 2023.
The financial numbers show that Meta is a healthy and lucrative company. Zuckerberg’s Metaverse obsession has not hurt Meta.
What Value Does Meta Offer?
Meta’s value is still growing despite the metaverse debacle and the awful new name. For example, Meta’s total assets grew from $164.218 billion on 31 March 2022 to $184.491 billion on 31 March 2023.
Impressively, Meta still owns four of the world’s top social media networks, Facebook, WhatsApp, Instagram, and Facebook Messenger. I estimate Meta’s social media had 7.889 billion monthly active users in January 2023.
Statista estimates Facebook had 2.958 billion monthly active users, WhatsApp and Instagram each had two billion users and Facebook Messenger had 932 million users in January 2023. Hence, Meta can still deliver more eyeballs than any other company on Earth. That is Meta’s true value, not hypothetical products such as the Metaverse and Artificial Intelligence.
Meta is a Bargain
Consequently, I think Meta was a bargain at the $262.04 Mr. Market paid for it on 26 May 2023. Meta offers share value growth. It’s share price rose from $191.63 on 26 May 2022.
In the final analysis, I consider Meta (FB) a tremendous value without the Metaverse. If you want a social media stock that will grow and make money. Meta is worth investigating. The only thing Meta does not offer is a dividend.
My advice to Zuckerberg is offer a dividend and change the name back to Facebook. However, Meta is still a tremendous value if neither of those things happen. If you want a strong tech stock that will make money you need to investigate Meta.
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