A Meta Analysis

Rebranding of Facebook Inc to Meta Inc and new product MetaVerse. Announced Facebook Inc Rebrand To Meta at the annual Facebook Connect 2021 conference: Tallinn, Estonia - October 28, 2021

No word does more heavy lifting in the English language nowadays than meta. If a comedian’s jokes aren’t very funny, we’re told that’s because his humor is meta. When a story’s plot doesn’t make sense, we’re told that the author’s themes are meta. And when a tech company runs into branding issues, we’re told that its new name will be Meta

Last week, the company formerly known as Facebook announced it would be changing its corporate name to Meta Platforms, Inc., (or simply Meta for short), and its stock, which currently trades under the symbol FB, will start trading under a new ticker, MVRS, on December 1st of this year. The name change highlights the current focus of its CEO Mark Zuckerberg – the metaverse.  From meta- (a prefix meaning “transcending”) and universe, the metaverse is a future vision of technology involving persistent and immersive computer networks – an internet that users live in instead of looking at. The vision includes products and services that offer virtual reality simulations and real-world experiences enhanced by computing data and sensors called augmented reality. Meta (née Facebook) has already invested heavily in this idea, acquiring Oculus VR, a leader in virtual reality technology, back in 2014. 

The company also re-organized its financial structure last week into two separate sections: “Family of Apps” – which includes its money-making social media software like the Facebook app, Instagram, Messenger,  and WhatsApp – and “Reality Labs” – which includes all the company’s investments in virtual and augmented reality systems. The targeted social media ad revenue will fund the metaverse projects. This corporate adjustment is similar to what Google did in 2015 when it separated its profitable search engine, Youtube, and Google Cloud from its more high-risk enterprises entitled “Other Bets” under its new parent company Alphabet.  Google’s “Other Bets” are a diverse group of gambles like autonomous driving company Waymo, anti-aging biotech Calico, and the mysterious engineering collective X; while Meta’s Reality Labs is a more concentrated bet on one technological vision.

Is the metaverse the future? Well, many tech writers mocked the video released last week of Mark Zuckerberg’s interaction with his metaverse avatar (pictured above) as frivolous. Nevertheless, many visions of the future seem downright silly until the very moment they become reality. There is a logic to the metaverse being the natural evolution of our internet, smartphone, and cloud computing age; and Meta has the infrastructure, vision, and cash flows to become a very important player in this brave, new world. But it won’t be the only player. Many of the largest tech companies are also investing in metaverse-related technologies, including Apple and Microsoft, so the winners in this virtual world are far from certain.

Model Update

On Friday, October 29th, the Fortunatus equity models all made adjustments to their underlying holdings. The Equity Growth model added a company in the real estate sector, the Equity Dividend model added a company involved in financial services, and the Emerging Growth Companies model increased its exposure to electric vehicle and cryptocurrency infrastructure.

There were no other trades in the Fortunatus models during the week ending on October 30th, 2021.  The major equity market sectors remain in a long-term favorable trend, and the Fortunatus Asset Allocation models are near their maximum allowable equity exposure with domestic stocks favored over international shares. 

Past performance is no guarantee of future results.  Trend signals are proprietary research of Fortunatus Investments, LLC, a Registered Investment Advisor with the Securities and Exchange Commission (SEC). Reference to registration does not imply any particular level of qualification or skill.  Prior to June 2014, Fortunatus Investments was a wholly-owned subsidiary of Executive Wealth Management, LLC and they continue to share common ownership and control. The data source for returns is FactSet Research Systems Inc. This chart is not intended to provide investment advice and should not be considered as a recommendation.  One cannot invest directly in an index. Executive Wealth Management does not guarantee the accuracy of this data.

Quote of the Week

So, a couple of thoughts. One is that I think that the phrase “the real world” is interesting. I think that there’s a physical world and there’s a digital world, and increasingly those are sort of being overlaid and coming together, but I would argue that increasing the real world is the combination of the digital world and the physical world and that the real world is not just the physical world. That, I think, is an interesting kind of frame to think about this stuff going forward.

An excerpt from Facebook CEO Meta Platforms, Inc. CEO Mark Zuckerberg’s interview last week with Ben Thompson on the technology blog Stratechery.

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Returns are calculated as indicated below with reinvested dividends not considered except for the Barclays U.S. Aggregate Bond Index. Data source for returns is FactSet Research Systems Inc. The London Gold PM Fix Price is used to calculate returns for gold.

1 Week = closing price on October 22, 2021 to closing price on October 29, 2021

 1 Month = closing price on September 29, 2021 to closing price on October 29, 2021

 3 Month = closing price on July 29, 2021 to closing price on October 29, 2021

 YTD = closing price on December 31, 2020 to closing price on October 29, 2021

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