What Wall Street thinks of Facebook’s meta-name, Metaverse Pivot

  • Analysts are on board, even if the profitability of the metaverse remains at ten years or more.
  • One analyst put his chances of success on Zuckerberg’s shoulders and “how well he can perform.”
  • Another suggested that Meta had proposed a “road map” for the company’s collapse if antitrust action began.

Top Internet analysts at Wall Street have endorsed Facebook’s new name, Meta, and its radically different strategic focus on the metaworld, but said success depends (again) on how CEO Mark Zuckerberg implements his vision.

According to some analysts, the company is spending so much on the initiative that it is difficult to reject the plan as a way to avoid bad press about its social networking service Facebook.

“The breadth and depth of innovation in the meta-universe today is truly impressive, and we think Facebook has spent more than $ 30 billion on its Reality Labs initiative over the past eight years,” said Rohit Kulkarni of MKM Partners, referring to the company’s new division. Metaverse. “We do not believe that changing the brand name of one of the world’s most famous brands will be considered in the shortest possible time due to the recent negative press.”

Kulkarni called Mark Zuckerberg’s goal to build the next computer platform “moon” and, according to his estimates, Facebook will spend $ 12 billion a year for at least the next five years. According to analysts, this is twice as much as Google estimates will spend a year on its monthly production of self-driving cars.

Speaking of Google, Mark Mahani of Evercore ISI said the rebranding of Meta was different from the 2015 reorganization of Google Alphabet. The previous move allowed Google founders Larry Page and Sergey Brin to move away from the company to focus on riskier investments in the early stages, while Facebook’s core position is “much more important,” the analyst said.

“We don’t think Zuckerberg sees his new Facebook Reality Labs as a risky venture capital venture, but as the company’s future, and that Facebook is no longer its main focus,” Maheini wrote. to investors.

Zuckerberg, of course, does not take a step back – he manages the next section of the purpose of Facebook is very practical. Maheini said that Zuckerberg “is likely to be the longest-serving founder / CEO of Big Tech,” and that the success of the metaverse is largely due to “how well Zuckerberg can perform.” Kulkarni said he expects to stay here for at least another decade just to see the metaverse.

In his presentation this week, the CEO made it clear that it would take companies years to make money in the meta universe. According to him, Mahani sees “several options for monetization”, including advertising, e-commerce and application sales. But tracking user acceptance “will be much more important” to demonstrate viability than predefined business models, the analyst added.

“Facebook’s innovative track record is impressive, and they are actively involved in this one-on-one initiative, unlike Google, which has taken a venture capital approach to making much smaller bets,” Maheini said.

Mark Schmulik of Bernstein said there seems to be a meta-universe option “for every use case – work, games, communication, trade – and device compatibility.”

“Of course, if it works,” he added.

The transition to a meta-version and a major investment in the meta-universe is simply “the next logical step in the evolution of Facebook from a place to share experiences to a place of shared experience,” Shmulik wrote. It is also forcing the company to stay ahead of the consumer change instead of catching up, as was the case with the mobile phone ten years ago, the analyst said.

“If you want, call it a metauniverse,” Shmulik said, “but a communications-based company also can’t afford to be exempt from mediation with new technology.”

Thomas Champion of Piper Sandler said Facebook is becoming a Meta and the refocusing “makes a huge sense,” including the distance between “social controversy” and Zuckerberg and Reality Labs.

The presence of individual organizations may also be ahead of the company in any regulatory action, as Facebook continues to face intense scrutiny of its business practices, which were again violated this year by informant Francis Haugen.

“It can also make it possible to divide the business into two parts if regulators take such action,” said Champion.

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