The stock is ripe for pull back. Somehow META has managed to stay off the radar in this rally.
Litigation- The FTC wants to tighten an existing 2020 Facebook privacy settlement to ban profiting from minors' data and expand curbs on facial recognition technology. The agency has accused Meta of misleading parents about protections for children. The FTC also wants undo the acquisitions of Instagram and WhatsApp, claiming Meta illegally maintains a monopoly in “personal social networking”. If these go through it will be a massive blow to the bottom line. Twitter is also suing Meta claiming Threads copied their business and trade secret theft, we'll see how this plays out. Lets also mention the never ending regulatory fines and litigation with European agencies. All these issues are a serious liability for the company.
The competition- The single biggest threat to Meta is TikTok. The reason they are lobbying so hard to get it banned. People migrate to the next big thing, older generations dont like change so i fully expect them to stay with Facebook until the end but the smart money saw whats happening with TikTok, how fast its taken over the younger generation and they want it, all of it. Steven Mnuchin is a smart man, he knows at the current rate of TikToks growth its going to overtake Facebook and Instagram within the next 2-3 years. Its in a hyper growth stage and Meta has simply stalled out.
https://www.cnbc.com/2024/03/14/former-treasury-secretary-mnuchin-is-putting-together-an-investor-group-to-buy-tiktok.html
TikTok is also launching a direct competitor to Instagram and WhatsApp, very soon. Those users 35 and under currently on Insta will easily migrate over to the newest thing. There is no loyalty to a service or app. If you are spending most of your time already watching tiktok, you can easily switch over to Notes, no need to go back to Instagram if all your friend are posting videos,pictures and chatting on TikTok. More time spent on Tiktok, less time on Meta apps.
https://www.forbes.com/sites/maryroeloffs/2024/04/09/tiktok-is-testing-a-new-instagram-rival-are-photos-making-a-comeback/
The presidential election- The Presidential ad spending is always massive and grows each year but its very limited. Only 28.1 percent goes to digital marketing, most goes toward tv ads not small facebook, google and newspaper ads.
AI – Meta announced their AI plans even making their own chips, or designing their own chips. This seems like a last ditch effort to stay relevant and a costly venture like the metaverse. I don't see what meta could do with AI other than mine peoples data more efficiently and sell it. Picture and video AI is limited, there's so many third party apps that can do it better.
Meta is running out of ideas, the company has peaked, we may start to see declining revenue and user activity year after year. The balance of influence is shifting. Meta had its run, time to join Myspace.
lastly the dividend, another effort to keep investors around. You can get a higher yield and take less risk holding a treasury bond.
