Welcome to Sunday Snacks, folks. We’re like that feeling after you’ve read a self-help book, without any of the self-loathing.

Notes/Housekeeping:

Next Wednesday is a Disney/Bob Iger re-fresh. Do not give us any shit for this.

If you’re new to the newsletter, we get a lot of shit writing about Bob Iger. Haters. All of you (really just 6 of you).

BTW Disney is entering negotiations with Comcast to buy Hulu, which just said it values the company at $60Bn (for comparison, that’s worth like...Volkswagen or Chipotle).

Alright let’s get started…

4 Points on Meta and its current state

Meta has had….a tough year.

Here’s why:

1. Layoffs for the first time.
   

2. Its flagship AR/VR device that expresses a severe lack of friends got a slick competitor in Apple’s Vision Pro.
   

3. Continuing losses on Metaverse-related things

BUT………

1. Why is Meta celebrating?

Look at their earnings, baby. Meta’s ‘Year of Efficiency’ is paying off.

• 3Q earnings showed a 23% jump in revenues, pummeling all expectations
  

• They did this with 13% less staff, as layoffs took place for the first time in the company’s history this year
  

• They also got the hint and realized that the Metaverse isn’t doing any favors. They’ve announced that they’re going hard in the paint with all things AI.

2. How did Meta accomplish this?

There’s a couple of huge narratives at play that have stuck to the company this year:

Facebook’s business, which a lot of people think was going in the wrong direction (lopsided investments into AR/VR), and the Zuck maybe kinda losing the script a little. BUT that hasn’t been the case since the later half of this year.

Here’s what’s happened so far:

1. Threads launched to huge success (Twitter/X’s bad smell kinda did this for them);
   

2. Slowly pulling investment out of the Metaverse;
   

3. Putting AI around the center of its strategy going forward;
   

4. Implementing AI/algorithm enhancements to Facebook/Instagram Ads

We’ll also mention that this is undeniably Meta’s best quarter in a long time, despite Apple releasing new privacy features regarding consumer data this year.

3. There is one big thing Zuck should do…

Get rid of Reality Labs. Immediately. For these reasons:

• The thing has lost $20Bn+ since last year (see chart below). Losses are going to continue. Zuck has said so.
  

• Product development with AR/VR seems to be a huge resource/time suck, and user retention is an underlying problem too (though we don’t know how bad).
  

4. Ok. What’s the angle here? Gimme the zinger*

1. There’s been a decade long conversation around the next iteration of how we’ll choose to communicate/interact with one another.
   

2. That conversation has been held hostage exclusively by AR/VR because of Facebook’s aggressive investment in Oculus and the Metaverse.
   

3. Facebook’s heavy investment to AI cements the notion of focusing back on its core functions as a company:

   1. keeping our eyeballs focused on its apps;

   2. squeezing extra ad dollars with a better recommendation engine

_{*Title will be used from now on bottom-line analysis. These are Pharma bro’s words. Forever in your debt.}

Again, none of this is investment advice.

What AI made this week

Have a great week!

Ahmed and Peter