Facebook Q3 - Focusing On Tomorrow

Facebook had third-quarter results out on Monday evening that were highly satisfactory. Despite some problems with Apple's new iPhone privacy settings which limit user tracking, Facebook posted a 35% rise in third-quarter revenues to $29 billion. Monthly active users on all platforms rose by 6% year-on-year to 2.91 billion. That's not far from half of the world's population.

There's been lots of bleating recently from politicians and "opinion makers" about content moderation. Just ignore that noise. Facebook employs 40 000 people to run after misinformation online, and remove it. They have also spent billions on AI that finds problematic posts, as they are uploaded, and deletes them. The technology gets better by the day. Facebook is doing its best. Keep in mind that most people who use Facebook, Instagram, Messenger and WhatsApp find the experience very positive, empowering and fun.

From now on, Facebook will break out a new reporting segment called "Facebook Reality Labs" that will span its metaverse ambitions, including augmented and virtual reality related hardware, software and content.

Chief Executive Mark Zuckerberg said Facebook's goal was for the metaverse to reach one billion people and generate hundreds of billions of dollars in digital commerce, this decade. Their investments in the new segment in 2021 alone will be $10 billion. My friends, that is a bold move.

That's not all. They also plan to spend up to $25 billion more on data centres, servers, network infrastructure and office facilities. This is a business that wants to be much, much bigger in future.

In the conference call on Monday evening, Zuckerberg said that the competitor that he fears most is TikTok. He hopes that Reels, which is also a video-based feature, could be a near-term growth driver. The audience that everyone wants are the old teenagers and young adults. They are digital natives and the big spenders of the future.

There was no word on the new name for the group, but I am warming to the idea of a corporate identity that is all-embracing, and bigger than the one platform for old folks.

Facebook gets a lot of negative press in the mainstream media, but remember that the business model of traditional news companies is threatened by social media platforms. The Washington Post, Wall Street Journal and New York Times have a direct interest in drumming up panic about Facebook, after discovering that they do what they do, but better, more scalably, and more profitably.

Facebook stock was down 3.9% in Tuesday's session, but that's no big deal. We have long recommended this share for your investment portfolio, and we will stick with it. I've been accumulating them on weakness.