Chase away those Monday blues with some schadenfreude for Mark Zuckerberg

 Mark Zuckerberg's hundreds of millions of tax-deductible "Zuckbucks" that boosted turnout in heavily Democrat areas in 2020 made him my enemy.  I feel no shame at reveling in his mounting misfortunes in business, even as Meta, his rebranded name for Facebook, remains robustly profitable.  Actually, that profitability, the result of Facebook and Google utterly dominating the online advertising business, and this depriving AT and every other conservative website of the ad dollars we need to stay alive (while keeping a lid on the viral distribution we need), is yet another reason to hate him, come to think of it.

So it is gratifying to learn that his so-far unsuccessful quest to make virtual reality games a revenue-spinner is flopping badly.  Jonathan Vanian of CNBC writes:

Meta reported second-quarter earnings on Wednesday and said that its Reality Labs unit, which develops virtual reality and augmented reality technologies needed to power the metaverse, logged a $3.7 billion operating loss.

The unit recorded $276 million in second-quarter sales, down from the $339 million in revenue it brought during the first quarter. Analysts polled by StreetAccount were projecting Reality Labs to record $421 million in sales and $3.5 billion in operating losses.

It's always bad to disappoint the analysts, because they help shape the prices people are willing to pay for your stock.  But the incredible earning power of the original business, Facebook, is saving that price:

Shares of Meta were up about 5% after it reported an 11% pop in revenue as advertising rebounded and the company issued an uplifting sales forecast for the third quarter. It shows that Meta is still very much an ad company with a big cost center.

And what a cost center V.R. has turned out to be.  So far, Zuck's quest to make V.R. a big business and to dominate it has cost his shareholders over $21 billion in just 18 months:

Last year, Meta's Reality Labs unit lost a total of $13.7 billion while bringing in $2.16 billion in revenue, which is driven in part by the company's sales of Quest-branded VR headsets. Reality Labs lost $3.99 billion during the first quarter. That puts its total losses at about $21.3 billion since the beginning of last year.

That would bankrupt most companies.  But not Facebook, which makes oligopolistic profits.

And even if shareholders wanted to fire Zuckerberg for wasting their money, they couldn't.  Like the Sulzberger family that controls the New York Times, Meta has two classes of shareholders, and one class dominates the board of directors, even with far less than a majority of the capital invested in the business.  Paraphrasing Animal Farm, some shareholders are more equal than other shareholders.

Selling is really all the majority of shareholders can do. They are powerless to exert any real influence on Zuckerberg, the company's chairman and chief executive.

If this had happened to a typical listed company, the chief executive would be under serious pressure from shareholders. But Zuckerberg, who owns about 13.6 per cent of Meta shares, is entrenched due to what is known as a dual-class share structure.

When the company was listed on the NASDAQ tech stock index in 2012, most investors got to buy "class A" shares, with each share being worth one vote at company general meetings. A few investors were issued class B shares, which are not publicly traded and are worth ten votes each.

As of January 2022, there were about 2.3 billion class A shares in Meta, and 412.86 million class B shares. But although class B shares represent just 15 per cent of total stock, they represent 64 per cent of the votes. And it means Zuckerberg alone controls more than 57 per cent of votes — meaning the only way he can be removed as chief executive is if he votes himself out.

Meanwhile, Zuck's other bright idea, a Twitter [and X]–like social media platform called Threads, intended to put Elon Musk on the defensive, is flopping, too. 

More than 100 million users downloaded the Instagram-linked app in the week that followed the highly publicized launch. However, the Meta CEO's purported "Twitter-killer" app has seen usage plummet by more than half because of a lack of features.

"Obviously, if you have more than 100 million people sign up, ideally it would be awesome if all of them or even half of them stuck around. We're not there yet," Zuckerberg said.

In order to keep users on Threads, Meta is looking to add more "retention-driving hooks" such as "making sure people who are on the Instagram app can see important Threads," said Chris Cox, Meta's chief product officer.

Zuckerberg said he considered the drop-off "normal" and expected retention to grow as the company adds more features to the app, including a desktop version and search functionality.

It's always possible that with billions of dollars to throw away, Zuckerberg could build Threads into a more formidable competitor.  But Musk is a moving target.  This battle is far from over.

Meanwhile, one of my all-time favorite memes:

https://www.americanthinker.com/blog/2023/07/chase_away_those_monday_blues_with_some_schadenfreude_for_mark_zuckerberg.html