Facebook Changing to Meta – is the stock worth buying?

facebook name change

Seemingly unable to stay out of the news these days, and in what seems to be one of the biggest PR campaigns we’ve seen, Facebook has decided to change it’s name (or atleast the name of the ‘parent’ company) to Meta. In this article, we’re going to talk about why the change, why the stock price dropped, and why we think this could be an opportunity to buy!

As always, the following is not financial advice, read our disclaimer

For the purposes of this article, we’re going to refer to the company as facebook to keep things nice and easy. Facebook began as a social media platform to connect U.S college students and has since grown to become one of the biggest companies on the planet and now includes instagram, whatsapp and occulus among others. To get a flavour for it’s sheer size, Facebook posted revenue in Q3 of 2021 at $28.2Bn! That’s quite a bit of cash….

So what’s with the name change then?

Well, it seesm there’s an official line and also a line that we’re going to infer. The official line is that because Facebook has grown into more than just a social media company, it needs a name to represent it’s business and to ensure people know that it is no longer just a social media company, but a technology company. CEO Mark Zuckerberg had this to say when asked:

“we are seen as a social media company, but in our DNA we are a company that builds technology to connect people, and the metaverse is the next frontier just like social networking was when we got started.”

Mark Zuckerberg

OK, so that makes sense right? And now for a little conjecture. You’ll no doubt be aware that facebook has been in the news recently for ‘toxic work culture’ with whistle blowers popping up and exposing facebook for allegedly prioritising profits over the health and safety of it’s users. On top of this, Facebook has struggled recently to shake the image of being an invasive data mega corp. Perhaps it is just coincidence that a complete rebrand of the company comes shortly after this and an opportunity to change public perception?

The Metaverse

There’s actually a more direct reson for the neame change. Facebook is well aware that to continue to grow its revenues it’s going to need to diversify. There are only so many users in the world that want to access Facebook and once you’ve gained the global Monopoly, things start to stagnate. This is exactly why facebook has branched out in recent years into other technology sectors. One of those sectors is virtual reality and more directly, the creation of ‘the metaverse’.

What is ‘the metaverse’?

Glad you asked. The Metaverse, at least in Facebooks mind, is a kind of virtual world that sits on top of our real world that can be used to do an array of things in a more social and connected way. Putting on a pair of smart glasses could allow you to speak to your friends face to face in your living room without them being there. Want to experience gaming like never before? You’ll do that in the metaverse. Want to learn how to play guitar? Doing it in the metaverse will guide you through it. If that sounds like some kind of dystopian skynet kind of future, that’s because it is….

Soooooo is it a buy?

But you’re an investor, so all you care about it, is it worth investing in right? well, here’s our take on it. Facebook share price is DOWN around 15% from it’s September high. This is because of 2 things. One is that investors are (semi) cycling out of tech companies for the time being and two, Facebook has had some bad press recently (as per my explanation above). Now ordinarily, it would be a simple decision whether to invest, because the only question would be – can Facebook recover? My instinct would be yes and I’m sure it has the clout to climb back to its september high, though I’m not sure it would climb much higher and we may have seen a few flat or meagre return years…..

But that was before. Now the question becomes, would you invest in Meta? And this question is a little harder to answer. You see, we need to think of Meta as a completely brand new company. It primary goals are to be the parent company of Facebook, and to bring the metaverse to the public. This is a massive undertaking and is one of the biggest technology drives we’ve seen from a company (save for maybe Tesla). One thing we are confident of though, is that if any company can do it, Facebook could. The sheer resources it has backing it, coupled with the sheer amount of data it holds and it’s ability to literally change market sentiment should not be underestimated. I think if they can get their marketing right and change public perception of the Metaverse, coupled with some Elon-levels of grit and innovation, I think they might just pull it off.

For this reason, we’ve invested. It only represents a 0.72% allocation in our portfolio, but we feel it’s worth sinking some money into at this price point. We will be keeping an eye over the coming weeks and months for any changes and to monitor performance. We have no issue in upping our allocation if public confidence starts to build!

binance account

Next Up…

That’s it folks and thanks for reading! Remember, investing isn’t trading and it’s important to have patience when investing for the long term. If you want to know exactly what we’re investing in every month, sign up to our newsletter below or head on over to our crypto section HERE for more articles like this one!

Let us know your thoughts by leaving a comment below!

Sign up for our newsletter and receive investing and wealth tips straight to your inbox