Meta – the moment the bright star dimmed?

Blain’s Morning Porridge – February 3rd 2022: Meta – the moment the bright star dimmed?

“Move fast and break things. Unless you are breaking things you are not moving fast enough.”

This morning: Meta’s collapse on the back of competition, regulation, and maturity (?) might just be the moment the whole New New Thang Bubble popped.

I’m afraid it’s a very short comment this morning – meetings, meetings, meetings, but the massive overnight collapse in Meta, or Facebook as I’m still thinking it’s called, was a critical moment for markets. It feels like that moment a plook (a zit to our American chums) just popped. It’s not a “supernova” event – like Enron – but it’s a good indication of what’s going to happen as limited shelf-life Tech firms mature..

Meta lost 20% of its value at one point after Mark Zuckerberg broke the cardinal rule of Tech and told the truth: Facebook has lost ground to newer, more hip, cool rivals like Tik Tok. If you want to know where it’s headed, look up Friends Reunited. Gosh…who knew? Competition is real? Tech evolves and old firms get eaten up for lunch by new firms? Really.. WOW.. (I’ve been saying for years… my kids think FB is for Grandparents.. it is.)

The other critical moment was Zuck’s comment it’s difficult to make money “where less data is available to deliver personal ads”. No Sh*t Sherlock. In a world where it’s being outcompeted, and regulators are establishing the primacy of personal data… Facebook is doomed. Good luck if you buy the story Meta has some special in to the Metaverse..

This morning’s quote – top line – is Zuckerberg’s own. I guess he’s not only not moved fast enough, but it’s also broken. Bureaucracies – which all mature businesses become, tend to self-repair very slowly…

What happens next will likely start to happen quickly. Facebook will suffer key staff defections. The stock price will spike up and down. The firm will miss deliverables, and while trying to fix FB, lose focus on Meta. The stock will probably stage a buy-the-dip rally, but like any main-sequence star towards the end of its life, it’s burnt all it’s hydrogen fuel of imagination, inventiveness and innovation.

It won’t go supernova, but as it collapses inwards as atoms fuse into heavier elements, first helium and down the sequence, and it will briefly become a red-giant burning brightly in the financial media-sphere for months before it contracts into its white-dwarf long drawn out slow-burnout into nothingless….

Ouch.. but not a bad metaphor if I say it myself..

What that particular moment of clarity for Facebook’s quietus spells for the rest of the Tech sector is equally critical. (Lots of criticals you will note this morning..) This market is punishing companies that miss earnings – particularly in Tech, confirming profits matter as much as increasing subscriptions and customer acquisition numbers – the key issue facing Netflix and streaming, and a host of other tech sectors.

If… If, I get time.. I write more about it tomorrow..

The good news this morning? Delighted to say the Morning Porridge website is back up and secure…

But only after enormous personal pain and strife yesterday as my website administrator and I tried to deal with the former website host GoDaddy. The staff at GoDaddy are perfectly pleasant and charming, but they are reading from scripts and were not listening to the questions we were asking. It meant they were unable to solve even the simplest problem.

I am sure every single reader of the Porridge has experienced similar frustrations dealing with large intransigent companies who treat us as assets to be farmed rather than customers to be pleased.

I have found the same thing with British Airways. Recently I discovered none of my recent flights have been credited to my account. I tried to use their website – didn’t work. Tried to call Silver Membership – takes ages to answer, and then to tell you they are only dealing with emergency flight queries. So I searched for a help-desk email. None. And then at the weekend I get a pretentious twaddlesque email from BA’s CEO telling me and all his other customers how’s going to turn around Britain’s Flag Carrier from its current less-than-Ryan-Air standards – by offering crisps on flights.

I don’t believe a word of it, and for the record am now a frequent flier on the excellent Emirates.

Going back to GoDaddy…  I sacked GoDaddy as website host two years ago after a succession of problems and crisis with the original Morning Porridge website. We moved to WordPress and another hosting service. The domain was supposed to move, but for some reason it didn’t – probably I missed ticking a box.

As a result GoDaddy let my website security certificate expire on Monday. When we worked it out on Tuesday what had happened we tried to resolve it. Yesterday they offered to reinstate it, and charged me £90 as an annual renewal cost. After I paid, they explained they would need our user names and logins to access to our new host service to renew the certificate. My website team said no way. GoDaddy countered we should move the site back to them!

Fortunately, during one particularly fruitless call, and after I was able to get back on to the old Porridge GoDaddy pages, my tech support team managed to work out how we could transfer the domain back into our control – which we successfully did and got a new certificate.

I asked for the £90 renewal fee back – which I am still waiting for.

The lesson: spend money on smart IT people.  

Out of time, and back to the day job..

Bill Blain

Strategist – Shard Capital