Social media platform growth is only and only based on ad business and no matter how many overpaid engineers you hire, you still get ad agency growth. You can build a DevOps shop to support the infrastructure of scale - but business is ads. Snap labeled itself “camera company” and shut down camera teams as soon as ride got bumpy - to focus on ads: because they’ve always been an ad company but did not focus on that identity. Tiktok is also fundamentally the same ad business as pinterest, meta, snap etc. Wall Street Analysts are beginning to catch up on companies pretending to be tech but being a business like any other and having returns from hype but not tech. But the fake identities of being tech is causing inflated valuations that are now going to keep correcting to ad business valuations. https://www.barrons.com/articles/facebook-and-snap-stock-are-both-cheap-why-shares-may-still-struggle-51662166821
I don’t think Meta overpays their engineers compared to other “Ad agencies” for the revenue it brings. No, I’m not joking about the tanking stock price. But it’s a tech company at heart - with engineering domain being the first class division.
What about Google? Are you saying that Google is not a tech company?
It also ads and services — their income is not from selling tech, u see. Tech is IBM, SAP 🤷♂️ It is kinda interesting nowadays. Silicon valley powerhorses do have strong tech, but their business model is not it. Apple security/privacy changes hit bottom line of many companies, if tech would be one of the major income of those, then this would not be big like it is.
I disagree. They are content delivery platforms that utilize advertisement to make income. Meta provides networks and messengers that help you easier connect with people you know and use advertising to pay for it. Snap is about ultra short form video content and non-permanent content in a world where "everything lives forever on the internet". They use ads to make money of that. Alphabet provides a method to actively search for content created by others and uses ads to make money in the process. None of the companies you mentioned could make money in ads without content. Now, those same companies though are also tech companies that have created a lot of the fundamental tech that we use today, including but not limited to, ML frameworks such as Tensorflow and PyTorch, frontend frameworks such as React and Angular, programming languages such as Go, database systems such as Cassandra, etc. The list goes on. So yes, while one of their main revenue centers is advertisement, stating they are not tech companies isn't just lazy but dishonest.
What is an Ad Company and what is a tech company?
Same way there’s virtually no difference between Netflix, Disney, hbo… but Netflix is considered tech company while others are not. So as market realizes that Netflix valuation is based on content and the tech is only in support of the content delivery - Netflix valuations will keep dropping. While snowflake, datadog, aws, are tech. Tech is what they sell.
This is like saying TV networks are not content producers, they are ad companies because their revenue comes from advertising.
Tv networks are dependent on ad revenues and production homes are content businesses. Now that Disney, hbo, peacock, etc all have streaming - the only tech piece that was originally differentiating Netflix, Netflix is not tech but a content company with a streaming service. That’s why their stocks are not expected to return to “tech” valuations.
Meta is 13 P/E, valuation wise it is priced like a no growth company. SNAP, I agree, is total garbage.
In the article the analyst explains how facebook can only follow the 5% growth rate of ad agencies and that’s why the rating was put on “sell” highlighting that the tech being “in support of ads”, tech not being the product and metaverse being a distraction from core business.
Which is actually a tech company then? Damn… Albertsons is the one true tech company to save us all…
I know blind is obsessed with faang, but the term is 10 yrs old and it was based on what stocks were expected to 10x. Wall Street doesn’t think these are the 10x return stocks anymore and that’s they it’s important to follow analysis like this - so you can get on whatever is next 10x
OP is differentiating a tech company has someone who sells tech. Instead of saying you are enabling something else through tech. The argument does makes sense, but at the end whether you sell tech or sell something else through tech, software engineers exists and they get paid a lot. How does it matter whether a company is tech or not tech when you get to work on cool stuff and get paid for it. Probably it hurts some people to realize this. But get over the reality people.
Those things aren't mutually exclusive. The domain a company operates in is irrelevant to the tech it uses to solve business problems in that domain.