Wall Street analysts are questioning the future viability of Facebook’s business model amid a wider economic slump that has hit the social network hard.
The slump in Facebook (now known as Meta) shares, which was followed by a hiring freeze at the company, has some questioning whether the tech giant can ever recover.
Mark Zuckerberg introduces Meta (Facebook)
Via CNBC:
“I’m not sure there’s a core business that works anymore at Facebook,” said Laura Martin of Needham, the only analyst among the 45 tracked by FactSet with a sell rating on the stock.
Nobody is suggesting that Facebook is at risk of going out of business. The company still has a dominant position in mobile advertising and has one of the most profitable business models on the planet. Even with a 36% drop in net income in the latest quarter from the prior year, Meta generated $6.7 billion in profit and ended the period with over $40 billion in cash and marketable securities.
The Wall Street problem for Facebook is that it’s no longer a growth story. Up until this year, that’s the only thing it’s known. The company’s slowest year for revenue growth was the pandemic year of 2020, when it still expanded 22%. Analysts this year are predicting a revenue drop.
Jeremy Bondy, CEO of app marketing firm Liftoff, commented: “I don’t see it spiraling in terms of cash flows in the next few years, but I’m just worried that they’re not winning the next generation.”
Over the past few years, competitors to Facebook, notably ByteDance’s TikTok, have enjoyed soaring popularity with younger users, while Facebook has lagged behind.
Like all tech stocks, the value of Facebook has slumped amid the wider economic downturn. The stock price currently trades at around $137, down from a high of 378 in September 2021.
Allum Bokhari is the senior technology correspondent at Breitbart News. He is the author of #DELETED: Big Tech’s Battle to Erase the Trump Movement and Steal The Election.
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