Mark Zuckerberg really went all-in on the metaverse. The CEO was so convinced that a virtual, shared world was the future of technology that he changed Facebook’s company name to Meta last year. But what has happened since the name change? The company’s market value was wiped out by $500 billion.
Since the rebranding, Meta’s $5 trillion declines has seen it fall from the lead of the world’s sixth-largest company by market capitalization to 11th, to be replaced by the likes of NVIDIA and Tencent.
Much of the problem behind Meta’s drop in market value stems not from the new name, but from the privacy changes Apple introduced in iOS 14, allowing users to opt-out of targeted ads and preventing apps from tracking cross-app behavior. Meta said the change would reduce its ad revenue by $10 billion this year — an announcement that shaved $232 billion from its market value in a single day.
Google is introducing similar privacy measures through its privacy sandbox for Android, although its implementation is less extreme than Apple’s, and it won’t be there for at least two years.
Then there’s Facebook. The social media platform had an unwelcome sight in its most recent earnings report: the number of daily users fell for the first time in the fourth quarter. In addition, the AR and VR division (Reality Labs), which is an important part of its metadata plan, has high hopes for a loss of $10.2 billion in 2021.
Another problem with Meta is that while many companies want a ride on the metaverse concept, most consumers are indifferent to what some see as a VR version of Second Life. Metaspace, Web 3.0, and NFTs may excite companies that want to take advantage of them, but at best these buzzwords have left many indifferent and puzzled, and at worst, the patents surrounding Metaverse’s eye-tracking advertising technology are nothing of help.
Meta still has a market cap of $561 billion. Its revenue in the fourth quarter was $33.76 billion, up 20% year over year, with a slight increase in total daily active users across all its apps, and it’s clear the company isn’t struggling. But maybe the metaverse, at least Meta’s interpretation of it, won’t be as revolutionary as Zuckerberg thinks it is.