Meta’s stock fell after they released their third quarter earnings. Most analysts agreed that the results were great. However, the guidance provided by management for the upcoming quarter drove the stock down. I wanted to see for myself, so I read the 10-Q. Below are some things I learned.

You made Facebook $56.11 last quarter

Last quarter each user in the US and Canada made Facebook an average of $56.11. Did you get that much enjoyment out of the platform? Would you rather go see 4 movies in a theater or use facebook for 3 months? 

The beauty of this business is that they don’t ask you to choose. You get to do both and the movie ads that you are looking at while you use Facebook help you decide which movies you will go watch. 

$56.11 per user is much larger than their competitors. SNAP only gets paid around $7.82 for each user in the US and Canada. PowerToTheElbow.com gets $0. Someone needs to work on that…

Is anyone using Virtual Reality?

Reality Labs is the subsidiary division of meta that makes virtual reality hardware products like Meta Quest, wearables, and the related software and content. This is a bad business that is not taking off. They actually had a decrease of 26% in sales year over year. If Reality Labs was an independent company it would have been out of business awhile ago. I am so jealous of this leadership team who is able to put out awful quarter after awful quarter and not be shut down. 

I wonder if this will ever take off? Do you have a Meta Quest? Is it fun? Let me know in the comments.

The income switch has been turned on

Meta flipped the “income from operations” switch this quarter. They increased operating profits 143% over 2022 to almost $14 billion. They say that it was due to increased revenue and a decrease in costs and expenses such as legal and marketing, but 143% is a huge increase considering the previous number wasn’t all that bad. Revenue only increased by 23% because the price per ad decreased by 6%. 

They were able to downsize their workforce, increase sales, and not sacrifice customer satisfaction all while their products price went down. Management has done an amazing job!

What was the income switch?

The way you increase sales while lowering costs and maintaining the quality of your product is to fire your marketing teams and middle management. Meta disclosed that they decreased their headcount 24% year-over-year. 

What were those employees doing? One clue is that they spent $69 million dollars on severance for marketing and sales employees and $41 million for severance on workers in the general and administrative categories. 

The marketing campaigns that the laid off staff were working on were at best ineffective.

Privacy advocates have lost the war

I have heard for years that we should stop using Facebook and Instagram because our privacy is at risk. Apparently, nobody has listened. Meta’s world wide daily app users grew by 7% last quarter and shows no signs of slowing. 

I do feel that there has been a big slow down in the amount of personal posting we do on these sites. They don’t publish stats like posts made per user. We are just constantly checking for updates that aren’t coming.