Why Meta Stinks Right Now

There are 4 main reasons the Meta Platforms share price has crashed. It's heavy investment in the metaverse, stronger competition, Apple changing iPhone privacy settings and the general weak market sentiment. I have a counterargument for all four of these issues. Some of them are strong, other factors might take longer to unravel, if ever.

Let's talk about the metaverse. The market is clearly not convinced. But what a lot of people do not understand is that the capital expenditure behind the metaverse is going into highly sophisticated data centres. This infrastructure will benefit Meta's existing businesses too. And if the metaverse fails, the company will be sitting on some of the best data processing infrastructure available. That will still be very useful. And what if the metaverse bet actually works and they become the Apple of the virtual world?

The other issue is competition, mostly from TikTok. But TikTok is a Chinese business where the communist regime is creating huge headwinds for local tech. Chinese businesses can no longer buy the best chips on the market from the US. TikTok is not much loved by advertisers and in my opinion it is only a matter of time before the big influencers start getting concerns about privacy. There are some officials in the US that think TikTok should be banned there. I back Instagram and Facebook to win this long term battle.

The Apple issue is a tough obstacle but at least the same rules apply to the competition. If Apple gets too cocky and starts a flourishing advertising business of their own, they may get in trouble with competition regulators.

Lastly, market sentiment will eventually turn. And usually, it is the hardest hit stocks that roar back the fastest. Meta still makes huge amounts of money, they are not using debt to fund their growth aspirations. If risk becomes attractive again, the metaverse bet might be seen in a different light. I would say there is a lot more upside from here.