The metaverse is still an unknown entity to manybut corporations are banking on it being the next internet. While Meta is leading the way for the metaverse, even working on various apps designed for the platform, many are starting to wonder if it will pay off in the end. Recently, an analyst advised investors that the opposite will be true, urging them to sell their Meta stocks since the metaverse ruins the company.
Meta isn’t paying off
Needham analyst Laura Martin told investors to sell their Meta stocks and use them as “a source of funds,” according to a report from Barron’s. While Meta is expected to make $27.7 billion in revenue during its current quarter, that is down 6% from Martin’s previous prediction and it might get lower.
As expected, rising costs are due to the various investments Meta has committed to the metaverse, which has reportedly slowed down some of its revenue. Reports also claim that Reels, seemingly Meta’s way of combating TikTok, isn’t making as much money as it should.
It’s not just Martin arguing this either, as analyst Brian White has also been cautious about investing in Meta. Ross Sandler, a Barclays analyst, also cut his price target on Meta from $280 to $370, so it appears that many investors are losing faith in Meta.
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The battle against TikTok
While Meta’s Facebook continues to be a big part of social media, analysts have pointed out how the app hasn’t been as popular as TikTok. The app has managed to capture everyone’s attention, whether you’re a kid who just likes silly dances or an adult who has unfortunately been misinformed by fake news.
Getting back users from TikTok has proven to be a struggle, not just for Meta but other companies as well. Streaming and gaming have also been blamed for the lack of Meta revenue, especially since Facebook has features that cater to both forms of entertainment.
Considering all the money companies have put into the metaverse, there’s a good chance that it could make Meta back its money. However, that reality is still years away and we’re not sure if investors will be patient enough for that.
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