Review of Facebook profits for the 3rd quarter: inside the Metaverse

This week, Facebook announced high profits for the 3rd quarter, continuing the transition to “Metaverse”, the company’s new name.

During Facebook’s announcement of earnings for the 3rd quarter, two quotes from Facebook leaders stand out:

Mark Zuckerberg, CEO of Facebook:

“I am proud of our record in navigating complex trade-offs in operational services globally, and I am proud of the research and transparency we bring to our work. Our programs are industry leading. We have made huge investments in security and safety with over 40,000 people, and we are on track to spend over $ 5 billion on security and safety in 2021. I think it’s bigger than any other technology company, even adjusted for scale. “

Cheryl Sandberg, Facebook’s Chief Operating Officer:

“We believe that through advertising we attract hundreds of billions of dollars outside of GMV.

For the past 5-7 years, Facebook has struggled with legitimate but exaggerated criticism. The questions are about the security of the platform, security and whether the platform is driven by good intentions.

I believe that the Facebook team is doing everything possible to protect and promote human connections for more than 3 billion people in almost every country and language. This is not an easy task, as Facebook is the first of its kind. I continue to believe that Facebook has good intentions and is the best at studying the effects of social media, but traditional media use this information against them. This makes sense because an audience of 3 billion people is a threat to the core business model of traditional media.

If at any time I believe that management does not seek to become better, I will rethink the investment business. I now endorse their work, performance and support their business, which supports hundreds of millions of small businesses, is 100% renewable energy, provides communication tools for global companies and families, and is a lifeline for many physical companies. who used their services during quarantine.

Long-term view of the company

Facebook’s Q3 earnings included high performance with steady growth in user numbers and cash flow generation. Our biggest conclusion is that more users use it daily than in previous quarters. In addition, they announced a share repurchase of $ 50 billion with an operating margin of 36%. Profits for its core business are likely to be 45%, which we will learn in the coming quarter when they split their Facebook Reality Labs segment into their core communications segment.

The business has a good position for current and future generations and is valued at approximately 12x EBITDA and 18x cash flow with limited debt. I think this is a stock that needs to be owned, not traded.

Twitter: @_SeanDavid

At the time of publication, the author or his firm may have positions in these securities. Any views expressed herein are those of the author and do not necessarily reflect the views or opinions of any other person or organization.

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