Yeah, this video is still brought to you by the 60 off coupon code and the Black Friday sale giving you lifetime access to the amazing programs on building your wealth and the stocks and psychology of money. Five million dollar trading challenge starting Monday Facebook Founder and CEO Mark Zuckerberg May retire in 2023 according to unconfirmed rumors. Now, the official statement of Facebook is that this is just fake news. This is not true. We love Mark Zuckerberg and he's not going anywhere. However, unofficially, the seed has been planted. Mark Zuckerberg May exit Facebook in 2023. I Want to be clear here: the official statement of Facebook is that these are unconfirmed rumors and that they are just straight up not true. However, I Like to think that it would make sense for Mark Zuckerberg to make a graceful exit stage right out of the company. Facebook And in this video, I'm going to explain why: Not only has Facebook declined 67 percent this here, but its core business model that is showing you ads on Instagram and Facebook has started to falter. Not only has growth in advertising slowed down, but following the Apple transparency tracking update about a couple years ago, Facebook's ads have been a lot less effective. That's because companies who use Facebook ads now have less data on their users to properly Target their ads or Target their ads as well as they used to be able to. Therefore, potentially you're seeing lower rates of return on their ads leading them to spend less money on Facebook as a platform. And we've noticed this deceleration of Facebook advertising certainly ever since the Apple transparency tracking updates. But also we started noticing some deceleration beforehand. What's important though is that Facebook's revenue is now starting to enter a revenue recession. Take a look at this: revenues of 27.7 billion dollars over 1 1.2 billion dollars less than revenues Facebook had in 2021. This is a big deal because it shows the growth story for Facebook has faltered, but not only has the growth story for Facebook faltered, the new potential growth story for Facebook isn't one many people actually have a strong belief in. and that is contributing to Facebook's 67 downfall and some cheering that maybe Mark Zuckerberg is actually going to take an exit. See here's how this works: When companies grow, they generally start out having very, very low revenues. Those revenues can grow exponentially and then those revenues tend to Peak Especially once you get to what's known as the law of large numbers, which is basically once you're so large, it's very difficult to attract new customers. Instead, what you try to do is monetize your existing customers more. kind of like Zoom is doing. See: Zoom is realizing that most people who need Zoom probably already have it and it's difficult to retain or should I say maintain the growth rates they experienced during the pandemic. So what instead are they doing? Oh hey companies, how about we sell you corporate communication devices like phones and zoom TVs And how about we send people to install Zoom offices in your offices? Unfortunately, probably the worst time to think about doing that, given that corporations are not only starting to lay off folks, but there's the wide belief that the first people to get cut in Silicon Valley or just anywhere around the world when it comes to remote work are people who work through Zoom or any kind of virtual means. So this is where we get an S-curve that flattens out and a real decline for a business tends to occur. Not only when that S curve flattens out, but when that S curve begins to decline. And unfortunately, that's been the case for Facebook. Not only have they had those slowing revenues, but now they've begun to decline. You can blame Apple all day long, but the fact of the matter is Facebook ads just aren't the business they used to be for Facebook So what does Facebook think? Hey, well, in order for us to keep growing rather than trying to double down on what worked for us in the past the old S-curve so to speak, let's do what people love doing in Tech and turn One S curve into another and what you do is as your first S-curve So Facebook Ads starts peeking out. You take cash flows from this and invest it into what you hope will be a new future S-curve and that for Facebook is the metaverse. This is why at the same time we're seeing revenues inflect, we're starting to see spending rapidly increase on the Metaverse. In fact, take a look at this from the last press release from Facebook and their last earnings report: Reality: Labs Expenses included in our total expense guidance or are included in our total expense guidance and we anticipate that reality Labs Operating losses losses in 2023 will grow significantly year over year here, and Beyond 2023, we expect to Pace Reality Labs Investments such that we can achieve our goal of growing overall company operating income in the long term. In other words, they're not saying hey, we're going to invest a lot of money in reality Labs Next year and then we're going to keep investing because reality Labs is going to be really, really profitable. Instead, what they're telling you here is we're going to keep losing money on reality Labs Without any indication that we're actually going to make a lot of money from it, but we'll slow down how much we spend on this speculative bet of reality. Labs Because we want the rest of the company's income over the long run to still grow, so we don't really want to sandbag our cash cow s-curve of Facebook ads with the Metaverse. But guess what exactly Mr Mark Zuckerberg is doing. He is taking the Cash Cow of Facebook ads and squandering it on an uncertain future in the Metaverse. That's because Mark Zuckerberg believes that in the future, we're probably all going to be in a Ready Player one style world and while that may be true and I'm personally kind of excited about that potential I think it's probably 10 to 20 years out and what half whoever I should say. what you have in the meantime is a lot of profits from Facebook going to something that is uncertain and unclear that even if we end up going into the Metaverse, we'll go into the Metaverse long enough to actually care about advertisements within it. These are two very uncertain points: not only the existence of the Metaverse, but your ability to actually advertise and effectively advertise in the Metaverse. convincing corporations to invest in your Facebook ads in the Metaverse and actually recognize some kind of well. Roi Well, it's possible, especially with the new VR headsets Now featuring cameras that look at your face and your facial reactions and can track your eyes, which guess what is absolutely brilliant for advertisers in the future. Imagine being an Advertiser and being able to see exactly which parts of your ad users eyes are paying attention to first, second, third, or not at all right? Like really neat potentials, but all of them are really big uncertainties and opium. so that's why a lot of folks are suggesting now. wait a minute. Mark Zuckerberg is the one burning all of the money at Facebook Well, maybe not all of it, but burning a lot of money on reality Labs at Facebook What if we just got rid of Mark Zuckerberg then he could take his reality last project somewhere else. Let us just milk the cash cow for as long as possible that is Facebook and Instagram and focus on competing with Tick Tock and actually making money from ads from short form content which nobody has really well figured out how to do yet. In the meantime though, Mark Zuckerberg is still here and when we look at their last press release, we could actually see that they've burned over 3.6 billion dollars in just a quarter on reality. Labs You could see that by going over here income or loss from Operations Family of Apps 9.3 billion dollars more than one third of that is getting burned on reality. Labs 30 six-ish to 40 cents of every single dollar at Facebook In the last quarter that they have earned net has been burned on Reality Labs and the company is so unconfident that reality Labs will actually make any money that rather than telling you oh yeah, we expect reality Labs will come to profitability in the future. They just say, don't worry, we're gonna spend less on Reality Labs in the future and we'll go back to making more money for the company since we'll spend less money on Reality Labs. This line right here to me is a big middle finger to Mark Zuck because the board at Facebook realizes investors are pissed and the reason Facebook is performing so terribly in the stock department is because people don't have confidence that this division reality Labs will ever make money. And if Mark Zuckerberg gets the boot then we don't have to worry potentially about wasting that much money on Reality Labs. And I actually think it's quite interesting thing that all of a sudden, the reality Labs division would see a large decline in Investments via what they've said in their press release, potentially aligning with the rumor that Mark Zuckerberg won't actually stay at the company any longer. See, you have to remember that if you're an investor looking at Facebook right now, you are making a bet on this S-curve coming which may never come. So if you're investing in Facebook stock, you're betting on this uncertain green. You have hope that the Metaverse will work, Because why else would you be spending 30 to 40 cents of every dollar that you're investing into Facebook on the Metaverse Via Reality Labs If you didn't actually believe in it at the same time, folks are wondering, wait a second, how is revenue down and your marketing and sales are up 6.3 percent? So Google isn't doing great either I Threw them in here. As a comparison, their sales are up 25.6 but their revenue isn't growing like that. That's when I say sales. By the way, I don't mean revenue I mean like selling it Administrative right? people like marketing, right? That's that's your sales. So Facebook is seeing a 6.3 increase in selling trying to get people to to run ads at Facebook but their revenue is still in Decline Now look, hey, their sales spend could have been a lot worse. They could have been spending like they were at Google. But poof, A lot of money still going into that Metaverse while the rest of the business can't keep it positive. Now of course we've got massive and macro economic circumstances right now and a crazy Federal Reserve tightening cycle that suggests hey, look, maybe you got to give them a pass I mean a lot of companies are down 40 to 50 percent, indices are down 20 to 30 percent. This is just the way it works. And if they want to invest into reality, Labs maybe the best time to do that is at the bottom of the market where there's the most pain and the most doubt that's possible. And if you believe in the Metaverse and you believe that Facebook's layoffs are going to help them reduce their operating expenses and increase their profitability, and they're going to be best positioned for actually a future of the Metaverse in the next 10 years versus other companies say Apple or Microsoft or who knows. PlayStation For goodness sakes, they've got virtual reality as well. Uh, then then hey, you know what? Maybe Facebook is a bargain for you right now, but the idea that Mark Zuckerberg could leave is something that is believed to be a tool for propping up Facebook stock in the short term. I Personally think Facebook stock could actually perform pretty decently going in towards the end of the year solely because even though Mark Zuckerberg Well, I shouldn't say solely because for two reasons: One, even even though officially Mark Zuckerberg ain't getting the boot, The Hope and the seed has been planted, that if he gets the boot next year reality Lab spending will go down and Facebook can go back to being profitable. hopefully at a time when businesses decide to advertise more and we see advertising revenues increase at Facebook And maybe we actually see some profitability for reels. But I Also think we've got a really neat opportunity of a window where between the Fomc minutes that come out tomorrow and towards the next CPI report. so for about two to three weeks, there could be an opportunity for Facebook to really rally under the idea that, okay, clearly clearly at the bare minimum. even if Mark Zuckerberg stays, the signal has been set, the market wants you to spend less on Reality Labs and focus on where we've been making our money ads. And let's learn how to monetize reels so we could actually make some real money today. and we'll worry about the 10 years for maybe five years from now. My take short-term play on Facebook might make sense long term, not a company I Want to hang my hat on? Thanks so much for watching and folks we'll see in the next one.