If you’re one of the many Meta investors or employees, our condolences. It may be time to ask the tough questions: Has Meta peaked — or is a rebound on the brink?

Putting Zuck in the ringer

Meta obituaries have been written many times over the years. But Zuckerberg repeatedly proved haters wrong. He’ll have to do it again, facing his biggest challenge yet — transitioning Meta into a metaverse company.

Since Facebook rebranded to Meta, billions were committed into the metaverse and hundreds of employees from other large tech firms were recruited. But newcomers may be rethinking their decision, with Meta down 35% in 2022.

• In 2021, the average price of stock granted to employees was $305. At its current price of $217, employees have lost an average 29%.
• Hundreds of thousands of employees potentially face paper losses — many unable to sell.

Why this matters: Unless Meta’s stock bounces, it risks employees leaving, or having to issue them more stock — thereby increasing costs and lowering the stock even more.

Nearly 8 years after Meta acquired Oculus, there has been little to show for it despite Zuckerberg’s efforts in VR — with ads still making up 98% of sales.

Is this peak Meta?

Meta’s stock has underperformed other large tech stocks and the S&P 500 in recent years — with a 10% compounded annual return in the past 5 years.

M.G Siegler, General Partner of Google Ventures, argues that Facebook’s product is dying:

• Sales growth relies on adding more ads to its platform — worsening the product.
• Consumer social apps are bound to fade — FB, Snap and even TikTok will all, one day.

FB lost users in its recent quarter for the first time ever — Instagram growth also slowing down. As per Piper Sandler, 27% of teens say they used FB in 2021 — vs 94% in 2012.

Investors: Cheap or not?

Meta’s stock is considered cheap by many metrics — but that doesn’t necessarily imply a good investment. Remember Cisco? Of course you don’t, it’s not relevant anymore today.

• Cisco (NASDAQ:CSCO) — the most valuable company on earth at one point — was also cheap after falling 80% from the dot-com bubble.
• Cisco tried diversifying into non-core businesses — but failed to transition — and its core business eventually eroded away.

Siegler sees it being a “long, long time” before the metaverse’s time. For now, investors and employees are playing the long-game — on the hope Zuck’s vision for the metaverse plays out.