Why the metaverse is good – even if Meta stocks say otherwise: analyst

news7f10/27/2022

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Why the metaverse is good - even if Meta stocks say otherwise: analyst

Meta has no choice but to spend billions of dollars building the metaverse if it wants to take control of its future, Goldman Sachs tech analyst Eric Sheridan arguments.

“Taking a step back from recent stock performance (both year-to-date and in the market thereafter), we see investments in Meta’s platform/infrastructure (starting mid-year) 2020) is both a) continuing to build independence from a Sheridan wrote in a note to clients on Thursday.

However, Wall Street continues to face the digital world created by Mark Zuckerberg dubbed the supermarket.

Stock Meta fell 22% on Thursday as Facebook and Instagram owners continued to spend heavily to build its metaverse. The build-up contributed to a 1,600 basis point drop in Meta’s third-quarter operating profit margin.

Meta executives signal that the horrifying pace of spending on virtual platforms will continue through 2023. The social media platform has outlined an annual cost growth of around 13% for the year. fiscal 2023, much higher than the Street forecast of 7%.

Morgan Stanley analyst Brian Nowak estimates Meta could spend a whopping $69 billion over the next two years alone supporting various initiatives, including the metaverse.

Nowak sees these investments as a signal of future “intensity of structural capital requirements” as Meta adjusts to post-IDFA social media landscape motivated more by short-form video.