Facebook (Meta): time for a turnaround in the company’s fortunes?

Stock Of The Week: Facebook (Meta)

Time for a turnaround in the company’s fortunes?

Facebook has been the ugly duckling of the tech stocks this year. It’s been a pretty ugly year for many of them so that’s no mean feat! Some commentators even say the famous FAANG acronym (Facebook, Apple, Amazon, Netflix, Google) needs to be ditched. This is a new era and the F & N don’t belong, they argue…

But just as everyone’s queuing up to ring the bell on Facebook as a mega tech stock, price gapped higher on Friday, and closed up 7% on the day…

As is so often the case, the reason for the size of the move isn’t immediately clear. You can scan the headlines and find that Facebook Pay was rebranded to Meta Pay, but who really cares about a name change?

There’s more to the story. Zuckerberg laid out his vision for Meta Pay alongside the announcement. For now, nothing changes. The future? That’s a different matter entirely. Zuck wants to be ready for the metaverse with a digital wallet.

“In the future there will be all sorts of digital items you might want to create or buy — digital clothing, art, videos, music, experiences, virtual events and more,”

“Proof of ownership will be important, especially if you want to take some of these items with you across different services. Ideally, you should be able to sign into any metaverse experience and everything you’ve bought should be right there.”

Considering the size of Facebook's cross-platform user base, being the first mover here could be a massive coup. If they could offer THE metaverse wallet, they could rake in billions in tiny transaction fees…

Even though the metaverse is still some way off, industry standards are already being defined. The Metaverse Standards Forum boasts members from Adobe & Alibaba to Microsoft & Nvidia, Sony, and of course Meta themselves.

Meta president of global affairs Nick Clegg explained why this is required:

“There won’t be a Meta-run metaverse, just as there isn’t a ‘Microsoft internet’ or ‘Google internet’ today,”

“Like the internet, the metaverse will be an interconnected system that transcends national borders, so there will need to be a web of public and private standards, norms and rules to allow for it to operate across jurisdictions.”

A truly globalised network that gives global companies direct access to global consumers for the sale and consumption of digital products. Where the tax is paid will be right up there among hurdles to overcome…

Anyway, Meta Head of Fintech Stephane Kasriel sums the idea up well.

“Designing products and infrastructure with the metaverse in mind today will help facilitate innovation that delivers greater access and real cost savings — before the metaverse even becomes mainstream. Now is the time to lay down the building blocks for the future. Because once that foundation is in place, the potential of the metaverse, and where it can take fintech next, will be limitless.”

So, is this Meta bounce just short-term relief due to a more constructive risk tone as markets begin to price interest rate cuts from the Fed within the next year?

Or are investors starting to believe in the potential of the metaverse?

Not investment advice. Past performance does not guarantee or predict future performance.