Since the beginning of 2022, Meta's (META -4.13%) stock has been cut nearly in half. But based on current developments, Meta might have an even greater uphill battle to reclaim its previous all-time high of nearly $384 in September 2021. Meta has suffered from one specific tangible failure that showed up in its earnings reports and some lackluster rollouts that might not become evident until the next quarter.
Leading the way in recent failures was Meta's bust in the metaverse. The company's virtual reality division, Reality Labs, posted a loss of $2.8 billion. Yes, you read that right -- $2.8 billion. For a company that is heavily investing in building the metaverse -- so much so that it changed its name to reflect that decision (from Facebook to Meta) -- to post such a staggering loss this quickly should be raising red flags for investors looking to open new positions.
Meta does crypto
Two other recent developments, which are still in the process of being rolled out, may drag down future earnings. The first came in August when Meta Chief Executive Officer Mark Zuckerberg announced that the company would finally be making a leap into the world of crypto. Non-fungible tokens (NFTs) are set to be unveiled on Instagram first and eventually on Facebook in the coming months in more than 100 countries. The social media platforms won't be a marketplace to buy and sell NFTs but rather a place where users can show off their digital assets.
Better late than never might be Meta's thinking with this move. Yet if Meta were truly in tune with trends and developments, then these features would have been available months and maybe even years ago as NFTs took the crypto world by storm. Since the beginning of 2022, the NFT economy has lost more than 75% of its value, and without a rebound in crypto, things could get worse. Only time will tell as to how the new integration will be received by Instagram and Facebook users.
Instagram woes
Lastly, Meta's Instagram looks like it's attempting to pivot from what made the social media site so popular in the first place -- photos. Over the last year, video-based platforms like TikTok rose in popularity as users flocked to short video clips instead. Instagram took notice of that and recently attempted to make the jump from a primarily photo-based site to one with more video capabilities.
Long story short, it wasn't received well by users. Some of Instagram's most high-profile users aired their objections so strongly that the head of Instagram, Adam Mosseri, took to the camera to explain that the video experiment will be rolled back.
Not only was it a flop with users, but it represents another case where Meta was late to the party. The future promise of NFTs might still be present, but at the moment, there hasn't been this little growth in the market in more than a year. Video-based social media is certainly a trend that should grow further, but Instagram's take on it was probably overdue and seemed to create more dissatisfaction than intended.
A first for everything
This is likely the first time that the long-term vision of Meta might be hanging in the balance. Since going public in 2012, Meta has led the way in social media, gradually becoming a part of everyday life. While only the metaverse losses have shown up on actual earnings reports so far, the untimeliness and lack of foresight with the NFT rollout and embrace of video on Instagram potentially show that Meta is losing its edge as an innovator.
The company's inability to stay ahead of the curve feels as though Meta is playing a continuous game of catch up. Until the company proves that the metaverse will become what it originally planned, or its social media platforms can please users, Meta might have more room to fall.
