Meta: Did The Whole 'New New Thang' Bubble Just Pop?

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by Tyler Durden
Thursday, Feb 03, 2022 - 01:43 PM

Authored by Bill Blain via,

“Move fast and break things. Unless you are breaking things you are not moving fast enough.”

Meta’s collapse on the back of competition, regulation, and maturity (?) might just be the moment the whole New New Thang Bubble popped.

I’m afraid it’s a very short comment this morning – meetings, meetings, meetings, but the massive overnight collapse in Meta, or Facebook as I’m still thinking it’s called, was a critical moment for markets. It feels like that moment a plook (a zit to our American chums) just popped. It’s not a “supernova” event – like Enron – but it’s a good indication of what’s going to happen as limited shelf-life Tech firms mature..

Meta lost 20% of its value at one point after Mark Zuckerberg broke the cardinal rule of Tech and told the truth: Facebook has lost ground to newer, more hip, cool rivals like Tik Tok. If you want to know where it’s headed, look up Friends Reunited. Gosh…who knew? Competition is real? Tech evolves and old firms get eaten up for lunch by new firms? Really.. WOW.. (I’ve been saying for years… my kids think FB is for Grandparents.. it is.)

The other critical moment was Zuck’s comment it’s difficult to make money “where less data is available to deliver personal ads”.

No Sh*t Sherlock. In a world where it’s being outcompeted, and regulators are establishing the primacy of personal data… Facebook is doomed. Good luck if you buy the story Meta has some special in to the Metaverse..

This morning’s quote – top line – is Zuckerberg’s own. I guess he’s not only not moved fast enough, but it’s also broken. Bureaucracies – which all mature businesses become, tend to self-repair very slowly…

What happens next will likely start to happen quickly. Facebook will suffer key staff defections. The stock price will spike up and down. The firm will miss deliverables, and while trying to fix FB, lose focus on Meta. The stock will probably stage a buy-the-dip rally, but like any main-sequence star towards the end of its life, it’s burnt all it’s hydrogen fuel of imagination, inventiveness and innovation.

It won’t go supernova, but as it collapses inwards as atoms fuse into heavier elements, first helium and down the sequence, and it will briefly become a red-giant burning brightly in the financial media-sphere for months before it contracts into its white-dwarf long drawn out slow-burnout into nothingless….

Ouch.. but not a bad metaphor if I say it myself..

What that particular moment of clarity for Facebook’s quietus spells for the rest of the Tech sector is equally critical. (Lots of criticals you will note this morning..) This market is punishing companies that miss earnings – particularly in Tech, confirming profits matter as much as increasing subscriptions and customer acquisition numbers – the key issue facing Netflix and streaming, and a host of other tech sectors.