This story appeared first Technical Manual and is republished here with permission.
Oh, the Metaverse!
Remember that little nonsense, from three years ago? In the depths of the pandemic lockdown, it seems like we will all be living in a digital cave forever. Metaverse was the signature of Facebook’s transformation into Meta Platforms.
What followed was a wave of layoffs and massive share buybacks, sending the stock up 60%.
Metaverse items are now very old, and have been replaced by other wishes.
On Thursday, the company, at its developer conference showed a cheaper version of its virtual reality headset, the “Quest 3S,” for $300 compared to the original Quest 3, which was launched earlier this year, for $500.
Also, a show-steel, two-mirror prototype, code-named “Orion,” that projects into a person’s field of vision, so you can see your email floating in front of your surroundings. The photo of Nvidia CEO Jensen Huang showing off the glasses (above) struck a chord with me in an incredibly fun way.
“On the downside, the new glasses appear to be several years (and $10 billion) away from general release (size, technology, and cost improvements),” wrote Merrill Lynch’s Justin Post in his coverage of the event. “Also, the event did not include any user metrics related to Metaverse, which suggests a limited impact on the VR ecosystem.” I’m not surprised.
Expensive demo, incomplete Metaverse—Meta has become the Queen of Vaporware. But that’s okay, because the Post is bullish on stocks anyway. He raised his price to $630 from $563. That’s an 11% gain from Thursday’s $567.84, but he rates the stock a Buy.
Meta stock trades at twenty-three times next year’s earnings per share right now, and the Post thinks it could reach twenty-five times based on its artificial intelligence capabilities. “The company appears to be successfully innovating in terms of new AI capabilities, driving usage growth that can offset terminal price concerns, and we see Meta as the top choice for AI in the consumer internet.”
It’s true that Meta has led the move to “open source” AI technology. Its Llama version of “productive” AI is all the rage, as OpenAI continues to lose top talent.
Therefore, Meta is more suitable for technology, not in the soft way that Mark Zuckerberg introduced three years ago. What the company was best at was driving an advertising engine, laying off employees, increasing operating profit margins, and buying back a ton of stock—old stuff that didn’t require the Metaverse.
MORE INTERNATIONAL REDDIT
Meanwhile, social media’s new darling, Reddit, is getting a vote of confidence Thursday from Deutsche Bank’s Benjamin Black, who notes that the company is posting localized versions of the site in Spanish, Portuguese, German, Italian, Filipino and more. other languages. While this happened with French language support earlier this year, Black noted, it led to greater activity among French Reddit users.
“This follows the first launch of the French translation earlier this year, which propelled France to become one of Reddit’s fastest growing countries, surpassing the US, which grew users by 59% y/y and revenue by 39% y/y y in 2Q24,” he notes. “In our view, this can accelerate the consumption of content, and the creation of content worldwide for the benefit of all users,” wrote Black, “which should drive the wheel of content that attracts more users, which should generate more content, which attracts more users.” That’s important because Reddit has half of its users from outside the US, while Meta, for example, gets 91% of its people from outside the country. If Reddit could close that gap, recalls Black, its number of users—as measured by “daily average users,” or, DAUs, something The Street cares about—could be 50 to 150% higher than current estimates of -2026.
I’m sure that in 2026, no one will remember that DAU numbers were supposed to belong to Reddit. And they won’t even remember it at the end of this year. Things like DAUs, user counts, engagement, etc., all sweat from quarter to quarter. So, while Black is right, I doubt it will mean much for stocks heading into 2026. Reddit has doubled since its March 21st IPO.
ROBO-TAXIs THE FUTURE?
You may remember that Tesla is expected on October 10 to unveil a “robo-taxi,” an event that has been eagerly awaited since the company’s disappointing second quarter report in July. Shares have risen nearly 30% since that report as investors have become less comfortable with Tesla’s sales pace, and as they await the unveiling of the taxi.
But how effective is the robo-taxi thing? A big believer is Bernstein’s Nikhil Devnani, who on Thursday recounted his personal ride in Waymo’s self-driving taxi in San Francisco. This is a familiar story now—Waymo, which is backed by Alphabet’s Google, operates 50,000 paid rides a week in California, according to Devnani. But “unit economics” is still tough even when you don’t pay the driver. Waymo’s car, the Jaguar I-Pace, which costs $75,000, should be equipped with a $100,000 LiDAR and other sensors, Devnani noted.
In a previous report—the third in a series authored by Devnani—he had noted that there are “real challenges to scaling up,” getting enough of these expensive cars on the road to have an economical fleet. In a recent post, after enjoying a ride with Waymo in San Francisco, Devnani concludes, “It’s early days, but recent developments and continued investment across the board make me even more convinced that AVs are the future, not just for robotics but also for respect. in personal car ownership over time, which I think is the big picture end game here. “
Perhaps, but one thing bears repeating. Waymo, and other operations, such as General Motors’s Cruise business, have very limited deployments in areas like San Francisco that are largely designed by many companies. As critics of self-driving technology, such as Meta’s head of AI, Yann LeCun, have repeatedly noted, this technology does not understand how to drive itself. any street in any city in any country. For that reason, I suspect that no matter what comes from Elon Musk on the 10th of October, we are further away from the promise of self-driving than Waymo and others will admit.
This story appeared first Technical Manual and is republished here with permission.
Source link
