On The Dramatic Collapse of Meta Platforms Inc

Meta Platforms, formerly known as Facebook used to have a market capitalization of over $1 trillion last year. This past Friday the market cap was just over $240 billion !. The collapse of this tech darling which was part of the so-called FANG group, in such as short period is astonishing indeed. In October, Meta (META) lost over 25% of its value in one day after quarterly earnings report. From a peak of $353 the stock price ended up at just over $90 on Friday. Year-to-date the stock has plunged by over 73% as shown in the chart below. As a constituent of the S&P 500 and a popular large-cap tech giant, Meta is a major holding in many mutual funds and ETFs. The dramatic fall will hurt them as well.

Meta’s YTD return:

Source: Google Finance

Meta’s 5-year return:

Source: Google Finance

I came across an excellent piece by Renaud Foucart at Asia Times on the decline of Meta. The following is a brief excerpt from the article:

Facebook may not be the original social media platform but it has stood the test of time – until recently.

Meta, the company that owns Facebook, Instagram and WhatsApp, saw its value plummet by around US$80 billion in just one day at the end of October, after its third-quarter profits halved amid the global slowdown. Meta is now valued at around $270 billion compared with more than $1 trillion last year.

Several issues have caused investors to turn away from the social media giant, including falling advertising revenue, a conflict with Apple over its app store charging policy, and competition for younger audiences from newer platforms such as TikTok.

Meta’s chief executive Mark Zuckerberg has also used his majority control to double down on his ambitions for the “metaverse”, a virtual reality project on which he has already spent more than $100 billion – with questionable results according to initial investor and media reaction. Zuckerberg has promised even more investment in the metaverse next year.

Source: New era upside of Meta’s share price collapse, Asia Times

The full article is worth a read.

Meta is basically an advertisement company that promotes itself as some kind of social do-gooder. It needs millions of people on its platform posting content with which it entices advertisers. So it is no surprise that investors bid up to high valuations only to realize the future is not so rosy after all. Accordingly they have re-priced the stock. Only time will tell if Meta’s stock is worth $90 or $10.

Disclosure: No positions

The Top Luxury Companies in the World by Revenue in 2021

The Top Luxury Companies in the World by Revenue in 2021 is shown in the chart below. France-based LVMH is in a league of its own in the luxury sector. The company generated about $76.0B last year. With scores of brands like Dior, Tiffany, etc. in various categories ranging from fashion to wine and everything in between, LVMH’s breadth is incredible.

Click to enlarge

Source: 6 new charts on luxury stocks – part 1 by Truman, Substack

Referenced firms:

  • LVMH Moet Hennessy Louis Vuitton SA (LVMUY)
  • L’Oreal (LRLCY)
  • Hermes Intl (HESAY)
  • Pernod Ricard (PRNDY)
  • Estee Lauder Companies (EL)
  • Kering (PPRUY)
  • EssilorLuxottica (ESLOY)
  • Tapestry Inc (TPR )

Disclosure: No positions

The Top 10 Companies by Gaming Revenue

The Top 10 Companies by Gaming Revenue in 2021 are shown in the chart below. Japanese giant (SNY) is the top company in generating the most revenue from gaming. Software leader Microsoft(MSFT) is the second top firm. I did not realize that Microsoft was so big in gaming. I knew Xbox was popular but did not know gaming is a big revenue marker for the firm.

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Source: 6 new charts on gaming stocks by Truman, Genuine Impact Newsletter, Substack

Other related stocks:

  • Nintendo (NTDOY)
  • Tencent (TCEHY)
  •  Activision Blizzard Inc (ATVI)
  • Electronic Arts (EA)

Disclosure: No positions

The Top 10 Lithium Companies by 2021 Revenue

Lithium is one of the hottest commodities in the world these days since it is used in the manufacture of batteries in Electric Vehicles (EVs). A handful of companies dominate the lithium-related industry. Among the top 10, 4 are Chinese companies though it has smaller global reserve of of the commodity. Australia has a relatively higher percentage of Lithium reserves. Hence 3 firms from Australia made it to the top 10 list based on revenues in 2021.

The largest Lithium producer is Chile-based SQM(SQM). North Carolina-based Albemarle (ALB) is more of a downstream player but had the top revenue last year according to an article by Truman at Substack.

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Source: 4 new charts on lithium – the hottest commodity in the world now, Genuine Impact Newsletter, Substack

The biggest Lithium mines in the world by reserves are shown in the chart below:

Click to enlarge

From an investment perspective, Chilean lithium giant Sociedad Quimica y Minera de Chile(SQM) has been an astonishing performer. Since 2011, the stock is up 4,000% according a piece by Ernesto Canales and Mario Canales of Latinometrics at Substack.

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Source: Psychologists, Remittances, and Chilean Giant SQM, Latinometrics

SQM has performed very well this year also. While the S&P 500 is in a bear market and many of the former hi-fliers are down even more SQM’s stock has shot up about 85% year-to-date.

Continued growth of EVs around the world should keep the demand high for Lithium and that should be beneficial to these companies.

Update(11/25/22):

Source: How Australia became the world’s greatest lithium supplier, The BBC

Disclosure: No positions