Facebook's Mark Zuckerberg to Quit | Death of Metaverse.

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challenge starting Monday Facebook

founder and CEO Mark Zuckerberg May

retire in 2023 according to unconfirmed

rumors now the official statement of

Facebook is that this is just fake news

this is not true we love Mark Zuckerberg

and he's not going anywhere however

unofficially the seed has been planted

Mark Zuckerberg May exit Facebook in

2023. I want to be clear here the

official statement of Facebook is that

these are unconfirmed rumors and that

they are just straight up not true

however I like to think that it would

make sense for Mark Zuckerberg to make a

graceful exit stage right out of the

company Facebook and in this video I'm

going to explain why not only has

Facebook declined 67 percent this here

but its core business model

that is showing you ads on Instagram and

Facebook has started to falter not only

has growth in advertising slowed down

but following the Apple transparency

tracking update about a couple years ago

Facebook's ads have been a lot less

effective that's because companies who

use Facebook ads now have less data on

their users to properly Target their ads

or Target their ads as well as they used

to be able to therefore potentially

you're seeing lower rates of return on

their ads leading them to spend less

money on Facebook as a platform and

we've noticed this deceleration of

Facebook advertising certainly ever

since the Apple transparency tracking

updates but also we started noticing

some deceleration beforehand what's

important though is that Facebook's

revenue is now starting to enter a

revenue recession take a look at this

revenues of 27.7 billion dollars over 1

1.2 billion dollars less than revenues

Facebook had in 2021 this is a big deal

because it shows the growth story for

Facebook has faltered but not only has

the growth story for Facebook faltered

the new potential growth story for

Facebook isn't one many people actually

have a strong belief in and that is

contributing to Facebook's 67 downfall

and some cheering that maybe Mark

Zuckerberg is actually going to take an

exit see here's how this works when

companies grow they generally start out

having very very low revenues those

revenues can grow exponentially and then

those revenues tend to Peak especially

once you get to what's known as the law

of large numbers which is basically once

you're so large it's very difficult to

attract new customers instead what you

try to do is monetize your existing

customers more kind of like Zoom is

doing

see Zoom is realizing that most people

who need Zoom probably already have it

and it's difficult to retain or should I

say maintain the growth rates they

experienced during the pandemic so what

instead are they doing oh hey companies

how about we sell you corporate

communication devices like phones and

zoom TVs and how about we send people to

install Zoom offices in your offices

unfortunately probably the worst time to

think about doing that given that

corporations are not only starting to

lay off folks but there's the wide

belief that the first people to get cut

in Silicon Valley or just anywhere

around the world when it comes to remote

work are people who work through Zoom or

any kind of virtual means so this is

where we get an s-curve that flattens

out and a real decline for a business

tends to occur not only when that S

curve flattens out but when that S curve

begins to decline and unfortunately

that's been the case for Facebook not

only have they had those slowing

revenues but now they've begun to

decline you can blame Apple all day long

but the fact of the matter is Facebook

ads just aren't the business they used

to be for Facebook so what does Facebook

think hey well in order for us to keep

growing rather than trying to double

down on what worked for us in the past

the old s-curve so to speak let's do

what people love doing in Tech and turn

One S curve into another and what you do

is as your first s-curve so Facebook ads

starts peeking out you take cash flows

from this and invest it into what you

hope will be a new future s-curve and

that for Facebook is the metaverse this

is why at the same time we're seeing

revenues inflect we're starting to see

spending rapidly increase on the

metaverse in fact take a look at this

from the last press release from

Facebook and their last earnings report

reality Labs expenses included in our

total expense guidance or are included

in our total expense guidance and we

anticipate that reality Labs operating

losses losses in 2023 will grow

significantly year over year here and

Beyond 2023 we expect to Pace reality

Labs Investments such that we can

achieve our goal of growing overall

company operating income in the long

term in other words they're not saying

hey we're going to invest a lot of money

in reality Labs next year and then we're

going to keep investing because reality

Labs is going to be really really

profitable instead what they're telling

you here is we're going to keep losing

money on reality Labs without any

indication that we're actually going to

make a lot of money from it but we'll

slow down how much we spend on this

speculative bet of reality Labs because

we want the rest of the company's income

over the long run to still grow so we

don't really want to sandbag our cash

cow s-curve of Facebook ads with the

metaverse but guess what exactly Mr Mark

Zuckerberg is doing

he is taking the Cash Cow of Facebook

ads and squandering it on an uncertain

future in the metaverse that's because

Mark Zuckerberg believes that in the

future we're probably all going to be in

a Ready Player one style world and while

that may be true and I'm personally kind

of excited about that potential I think

it's probably 10 to 20 years out and

what half whoever I should say what you

have in the meantime is a lot of profits

from Facebook going to something that is

uncertain and unclear that even if we

end up going into the metaverse we'll go

into the metaverse long enough to

actually care about advertisements

within it these are two very uncertain

points not only the existence of the

metaverse but your ability to actually

advertise and effectively advertise in

the metaverse convincing corporations to

invest in your Facebook ads in the

metaverse and actually recognize some

kind of well Roi well it's possible

especially with the new VR headsets Now

featuring cameras that look at your face

and your facial reactions and can track

your eyes which guess what is absolutely

brilliant for advertisers in the future

imagine being an Advertiser and being

able to see exactly which parts of your

ad users eyes are paying attention to

first second third or not at all right

like really neat potentials but all of

them are really big uncertainties and

opium

so that's why a lot of folks are

suggesting now wait a minute Mark

Zuckerberg is the one burning all of the

money at Facebook well maybe not all of

it but burning a lot of money on reality

Labs at Facebook what if we just got rid

of Mark Zuckerberg then he could take

his reality last project somewhere else

let us just milk the cash cow for as

long as possible that is Facebook and

Instagram and focus on competing with

Tick Tock and actually making money from

ads from short form content which nobody

has really well figured out how to do

yet

in the meantime though Mark Zuckerberg

is still here and when we look at their

last press release we could actually see

that they've burned over 3.6 billion

dollars in just a quarter on reality

Labs you could see that by going over

here income or loss from operations

family of apps 9.3 billion dollars more

than one third of that is getting burned

on reality Labs 30

six-ish to 40 cents of every single

dollar at Facebook in the last quarter

that they have earned net has been

burned on reality labs and the company

is so unconfident that reality Labs will

actually make any money that rather than

telling you oh yeah we expect reality

Labs will come to profitability in the

future they just say don't worry we're

gonna spend less on reality labs in the

future and we'll go back to making more

money for the company since we'll spend

less money on reality labs this line

right here to me is a big middle finger

to Mark Zuck because the board at

Facebook realizes investors are pissed

and the reason Facebook is performing so

terribly in the stock department is

because people don't have confidence

that this division reality Labs will

ever make money and if Mark Zuckerberg

gets the boot then we don't have to

worry potentially about wasting that

much money on reality labs and I

actually think it's quite interesting

thing that all of a sudden the reality

Labs division would see a large decline

in Investments via what they've said in

their press release potentially aligning

with the rumor that Mark Zuckerberg

won't actually stay at the company any

longer see you have to remember that if

you're an investor looking at Facebook

right now you are making a bet on this

s-curve coming which may never come so

if you're investing in Facebook stock

you're betting on this uncertain green

you have hope that the metaverse will

work because why else would you be

spending 30 to 40 cents of every dollar

that you're investing into Facebook on

the metaverse Via reality Labs if you

didn't actually believe in it at the

same time folks are wondering wait a

second how is revenue down and your

marketing and sales are up 6.3 percent

so Google isn't doing great either I

threw them in here as a comparison their

sales are up 25.6 but their revenue

isn't growing like that that's when I

say sales by the way I don't mean

revenue I mean like selling it

administrative right people like

marketing right that's that's your sales

so Facebook is seeing a 6.3 increase in

selling trying to get people to to run

ads at Facebook but their revenue is

still in Decline now look hey their

sales spend could have been a lot worse

they could have been spending like they

were at Google but

poof a lot of money still going into

that metaverse while the rest of the

business can't keep it positive now of

course we've got massive and macro

economic circumstances right now and a

crazy Federal Reserve tightening cycle

that suggests hey look maybe you got to

give them a pass I mean a lot of

companies are down 40 to 50 percent

indices are down 20 to 30 percent this

is just the way it works and if they

want to invest into reality Labs maybe

the best time to do that is at the

bottom of the market where there's the

most pain and the most doubt

that's possible and if you believe in

the metaverse and you believe that

Facebook's layoffs are going to help

them reduce their operating expenses and

increase their profitability and they're

going to be best positioned for actually

a future of the metaverse in the next 10

years versus other companies say apple

or Microsoft or who knows PlayStation

for goodness sakes they've got virtual

reality as well uh then then hey you

know what maybe Facebook is a bargain

for you right now but the idea that Mark

Zuckerberg could leave is something that

is believed

to be a tool for propping up Facebook

stock in the short term I personally

think Facebook stock could actually

perform pretty decently going in towards

the end of the year solely because even

though Mark Zuckerberg well I shouldn't

say solely because for two reasons one

even even though officially Mark

Zuckerberg ain't getting the boot The

Hope and the seed has been planted that

if he gets the boot next year reality

lab spending will go down and Facebook

can go back to being profitable

hopefully at a time when businesses

decide to advertise more and we see

advertising revenues increase at

Facebook

and maybe we actually see some

profitability for reels but I also think

we've got a really neat opportunity of a

window where between the fomc minutes

that come out tomorrow and towards the

next CPI report so for about two to

three weeks there could be an

opportunity for Facebook to really rally

under the idea that okay clearly clearly

at the bare minimum even if Mark

Zuckerberg stays the signal has been set

the market wants you to spend less on

reality labs and focus on where we've

been making our money ads and let's

learn how to monetize reels so we could

actually make some real money today and

we'll worry about the 10 years for maybe

five years from now my take short-term

play on Facebook might make sense long

term not a company I want to hang my hat

on thanks so much for watching and folks

we'll see in the next one