Zuckerberg has made changes at Meta which have helped. Cost cuts will plump up EBITDA margins this year to 50%, according to Refinitiv estimates. Analysts are projecting Meta grows its revenue almost 9% this year, a big improvement from a decline last year. Profitability should jump 35%.
But some of that share price boost does come from accruing value from Twitter. Public shareholders may have migrated to Meta once Twitter went private, for example. Meta’s Facebook and Instagram have likely gained advertisers. And at least according to a letter from Twitter’s lawyers on Thursday, Meta has picked off some plum coders from Musk’s company.
It’s less clear if Twitter’s users have moved, but in that sense, Threads may hurt Meta more than it helps. The platform is easily downloaded via Instagram, and while the microblogging site feels like Twitter, the curation of Threads’ content is based, at least initially, on followers from Instagram. Any new user on Threads would have to do some heavy-lifting to create the same experience as they receive on Twitter.
It suggests people might use Threads at the expense of Instagram. Even if Threads were to put Twitter out of business, that exercise isn’t worth 11 Twitters. And even if it were, Zuckerberg, whose own net worth has risen $70 billion since last fall, has already received the benefit. The Meta enterprise trades at a multiple of EBITDA a fifth higher than Alphabet’s, despite that the latter is focused on the more promising initiative of artificial intelligence. Zuckerberg may be eager to take on Musk. Launching a business competitor, though, is a little better than a
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