Is Meta Platforms Heading in a New Direction?

Facebook's announcement of a rebrand to Meta Platforms (META 1.54%) garnered mixed reactions from the general public and investors alike. In this segment of Backstage Pass, recorded on Nov. 1, Fool contributors Rachel Warren, Connor Allen, and Toby Bordelon weigh in on Facebook's rebranding to Meta and what it means for the future of the tech giant. 

Rachel Warren: All right, we're going to roll right along into our fourth topic. We have about 20 minutes left in the hour.

As probably [laughs] the entire world knows by now, Facebook's announced that it is rebranding to Meta -- short for the Metaverse.

Facebook, the platform, will still be known as Facebook, but the parent company will be known as Meta. Just like when Google became Alphabet in 2015, which made the Google we know its subsidiary. When they announced the name change, they announced it at this event they held called the Connect 21.

The announcement said, "Today at Connect 21, Mark Zuckerberg laid out our vision of the Metaverse as the successor to the mobile internet. A set of interconnected digital spaces that lets you do things you can't do in the physical world. Importantly, it will be characterized by social presence. The feeling that you're right there with another person no matter where in the world you happened to be. In keeping with that vision, he also is moving forward. This is an exciting new chapter for the company and we're excited to help bring them Metaverse to life."

Here's my question, and I really want to get both of your thoughts on this. 

What was your reaction to this rebranding effort by Facebook? Do you think this is just a PR move as the company is facing some scrutiny right now from regulators, lawmakers, and the public? Or do you think this will perhaps a new direction forward for Facebook? Connor, what do you think?

Connor Allen: Well, my reaction was confusion. [laughs] I really don't know what's going on at Facebook right now. It doesn't make much sense to me what their mission is going forward. Like, what are you trying to be? Who are you trying to be?

Those are the questions that I have for the company. You have the most valuable social media brand in the entire world and you're trying to move away to focus on the metaverse.

I understand that they're not trying to move away, but rebranding the company is signaling that. I know that Zuck, he's an entrepreneur at heart and he's always willing to try new things and start new things. This could be one of them. But I'm not so sure about this specific move that he is making. It's easy to scrutinize him during this time, I'm doing it right now.

Along with what seems like the rest of the finance world is all pretty tightly scrutinizing Mark Zuckerberg right now. But you got to remember that the guy has provided incredible returns for investors, he has created one of the world's most valuable social media brands or the world's most valuable companies.

I wouldn't scrutinize too much, but it is something to be a little bit concerned about. A couple of weeks ago, this is a little bit about Facebook. A couple of weeks ago, it was a great example of David Gardner's snap test. Facebook shut down all their platforms, WhatsApp, Instagram, Facebook, they all shutdown.

Everybody lost their minds for what seems like 24-hours. No one can get on Instagram, no one can get on WhatsApp. I was just thinking, "Come on, can we not go 24 hours without it? Is that really a problem?"

But David Gardner's snap test just means if you snap your fingers and that company went away, what will the world do? I think that was a great display of how valuable the brand is, how valuable the company is.

But as far as sentiment toward social media in general, especially involving Facebook, is going forward, just public sentiment. I don't know what that's going to be. Right now I see a lot of push back to what social media has become over the past few years.

You've got a lot of stuff about how people feel when they're on social media and how it makes them feel. I think that could be an issue for them moving forward. But to be honest, this is just my opinion on it. I think that the product, even if it has its negative effects, I think it's such a sticky product that it's not going away. I don't think it's something that they have to be concerned with.

Yes, Facebook may be rebranding to try to get away from that narrative, but if I were Mark, I would try to change the narrative. I would try to change the narrative, I wouldn't try to run from it. And I think he may be trying to run from it with this rebranding that he's doing right now.

Toby Bordelon: That's a good point there. That last point, whether you're trying to just run from the narrative. I think I hadn't considered that. I think you can't because people are going to come after you either way.

You've got at some point to just deal with it. I'm mixed on this. I'm mixed on the rebrand. I don't love it. I don't love the Meta name. I think that's like what is this? It seems weird. I think what is it even called? It's called Meta something.

I don't even know the full or meta. I don't recall on top of my head. I thought initially like MetaCorp which would sound like this big evil corporation, which is even worse, right from a PR standpoint. [laughs]

That's not it. It's something else. Everyone's going to obviously call it Meta. Maybe if we even do that, if you want to joke about it, I think you can feel free because they deserve that. Now I'm not against naming in general. I think if you ignore the metaverse. Facebook has three major properties.

The Facebook site, Instagram, and WhatsApp. If you want to rename your company to encompass all of that. Sure. It's what Alphabet did. They said we're more than Google's. We're going to call ourselves Alphabet and Google subsidiary. We got this other stuff going on.

That makes sense. To get beyond that initial thing that made you money and made you famous and recognize the fact that you're a bigger entity now. But it's almost like what Facebook is doing is when they see meta, they're saying we're focused on the metaverse.

That's almost our narrow focus going forward and it shortchanges the rest of the company. I would have liked to see a more, I'm not going to say generic, but a broader umbrella and say, we're going to create this new entity as a subsidiary that's going to be working on the metaverse. Maybe it will relate to these other properties somehow too, which would make sense. They're all social media stuff really.

But, I don't know, it's a weird direction to go in, I think. When you have an opportunity to be a broader rebranding, we are much more than this. We are greater than this. Here's what we're thinking about.

Here's what we're looking at. I don't think it's fixes the issue doing this. I also think, look, I'm not convinced the metaverse can be a significant source of revenue anytime soon. Which, I mean to his credit, I don't think CEO Mark Zuckerberg does either.

Because he's been pretty clear that, look, this is a long term brokerage for us and you shouldn't expect any return imminently in the short-term. He's always been a long-term thinker and he still has that degree there. I think he's been clear that this is far off.

I don't think you can knock him for that too much, but I just don't love the name. I'm still trying to get my head around it. It just doesn't make that much sense to me.

Warren: It was funny because I remember I was waiting for all the memes to come out as soon as the name was announced. I was just scrolling the internet for the memes because I knew that's what was coming next.

Bordelon: That's the first thing you do.

Warren: Right? Where's the memes? 

Bordelon: You hit Twitter as soon as this name breaks. [laughs] What are people talking about? Yeah. Which says something itself. That what's the first place you go, it's the Twitter. Yeah.

Warren: We go to another social platform. Clearly that is what life has become. No, I agree with both of you. I guess, I think there's a few different ways you can look at this. I guess if your Facebook, you're thinking from maybe, perhaps they're thinking from a PR perspective, it detracts from the widely negative press coverage of Facebook right now and it gets people talking all about this name change.

Saying that you've got the ongoing investigations against the company, potential scrutiny from the FTC, whistleblower allegations brought against Facebook, which just seem to explode with every passing week.

I would say that perhaps if you're looking at it from Facebook's perspective, this could stem the tide for a few news cycles. I've looked, it's like this random, seemingly random name obviously types the metaverse but doesn't seem to really fit anything that Facebook so much has done before.

But everyone's talking about it and it's leading the headlines. It was one of the biggest new stories of last few days. I guess from that sense that would be an effective strategy there. But I think in terms of what does this do for the very real world concerns that the public and the users have about Facebook and its platform? I don't think it resolves those.

A name change is definitely not going to fix concerns about how users perhaps are being harmed by the algorithms on the platform. I think if indeed it's this idea to perhaps change the direction of the company, that would be great. But I think a name change in and of itself is like trying to put a band-aid on a broken bone.

It's not really going to do the trick. I think it will be very interesting to see what's happening moving forward. I think it's something for investors to watch for sure.