Why investors rewarded Apple but fled Amazon, Google, Facebook after earnings

Tim Cook, chief executive officer of Apple Inc., outside the Apple Fifth Avenue store in New York, US, on Friday, Sept. 16, 2022.

Jeenah Moon | Bloomberg | Getty Images

Apple shares create a safe haven for Big Tech investors, says Needham's Laura Martin

The reasons varied. Meta struggled with shrinking free cash flow as it continued its metaverse spending spree. Alphabet said ad sales were slowing as YouTube reported its first-ever revenue decline. And Microsoft was pressured by weak guidance and cloud revenue that missed expectations. Amazon missed revenue estimates and signaled a weak holiday quarter and narrowing profits.

But Apple now looks a lot more stable than its peers, especially as fears of a recession start weighing on ad sales and potential holiday spending. It’s largely because Apple relies on hardware and services that people are still buying.

Mac revenue was up 25% year over year, for example. And while iPhone revenue missed estimates, it still rose 9.67% year over year. Services also popped 4.98% year over year, despite missing analyst estimates.

And Apple managed this while the larger phone and PC industry saw big declines. Worldwide smartphone shipments declined 9% during the third quarter, while Apple’s shipments increased by 8%, despite its higher-priced devices, according to an estimate from research firm Canalys this week.

“Demand for premium devices remains intact,” wrote Cowen’s Krish Sankar in a note Friday.

In short, Apple’s business remains strong, and demand for its products remains high around the world, even in emerging markets, bucking downward trends for global smartphone sales from other brands.

“Following Apple’s F4Q22 results, it remains our top pick and, we believe, will likely remain a relative safe haven for many as the macroenvironment remains highly uncertain and choppy,” Cross, of Credit Suisse, said. Cross added that Apple’s results showed the company continues to grow in every region it sells in, despite recent price increases and weakening consumer sentiment.

Apple’s quasi-guidance also was largely in line with expectations, versus companies such as Amazon that suggested a weaker holiday quarter.

Apple CFO Luca Maestri said total year-over-year revenue would grow in December but slower than the 8.1% growth during the September quarter.

But the stat still showed many analysts that Apple would continue its sales growth streak that’s been in effect since the start of the pandemic. Keep in mind, next quarter’s growth will have to be off a massive $124 billion base of sales from last year’s December quarter.

However, the way that Apple now gives guidance through data points leaves a lot of room for interpretation, and some analysts believe that the current quarter could be worse than the market is pricing in. At least one even thinks Apple’s data point suggests a down quarter.

“Apple is essentially saying revenues are going to be down next quarter,” Bernstein’s Toni Sacconaghi said on CNBC’s “Squawk Box” on Friday, pointing out that Apple’s December quarter has an extra week this year.

Sacconaghi said some of Apple’s Big Tech peers also seemed to have issues controlling costs, whereas Apple remains fairly lean and profitable.

While Apple CEO Tim Cook told analysts that the company was seeing the effects of inflation on its costs, particularly in logistics, it also has managed the chip supply shortage well and said Thursday that it had no silicon shortages during the quarter.

Apple isn’t immune to the advertising slowdown hitting Meta and Alphabet, though Cook said Thursday that ads are a very small part of Apple’s services business.

Add it all up, and it’s possible to see why some analysts consider Apple to be resistant to a recession.

“Overall, our viewpoint remains consistent that Apple remains recession resilient given its products, services and wearables businesses,” wrote Piper Sandler’s Harsh Kumar.

— CNBC’s Michael Bloom contributed to this report.

Facebook parent Meta Q3 2022 earnings

Mark Zuckerberg, co-founder and CEO of Meta Platforms, in July 2021.

Kevin Dietsch | Getty Images News | Getty Images

Facebook parent Meta reported earnings after the bell. Here are the results.

Earnings per share (EPS): $1.64 vs $1.89 expected, according to Refinitiv

Revenue: 27.71 billion vs. $27.38 billion expected, according to Refinitiv

Wall Street is also watching other key numbers in the report:

Daily Active Users (DAUs): 1.98 billion expected, according to StreetAccount

Monthly Active Users (MAUs): 2.96 billion expected, according to StreetAccount

Average Revenue per User (ARPU): $9.32 expected, according to StreetAccount

Facebook’s parent is contending with a broad slowdown in online ad spending, challenges from Apple’s iOS privacy update and increased competition from TikTok. Add it up, and Meta is expected to post its second straight quarter of declining sales.

Although Meta is investing heavily in its Reels short-video service to steer users away from TikTok, the product is in the early days of generating revenue and isn’t as lucrative as Facebook’s core features, like Stories and the newsfeed.

Meta is trying to make Reels more attractive to advertisers and has announced new ad formats intended to give businesses enhanced options for promoting their products through short videos. The company also recently debuted new ways for companies to advertise on Instagram and Messenger, padding its overall ad inventory, which could potentially bolster overall sales.

Still, the stock is down 62% for the year, more than double the drop in the Nasdaq, and analysts are skeptical of the company’s prospects through this year and into 2023.

Bank of America recently downgraded Meta from buy to neutral and said in a research note that “we expect advertiser budget cuts in early 2023 to weigh on sentiment and drive added uncertainty” following the Apple update and the “Reels transition.” The firm said it expects 4% growth in 2023, below Wall Street estimates of 9%, and sees “some downside risk to our estimates in a recession.”

Investors will also be focused on Meta’s user numbers, which have stagnated. Most concerning are the user figures in the U.S. and Canada, its biggest region for revenue.  

In the second quarter of 2022, Meta counted 197 million daily active users in those two North American countries, down from 198 million in the same quarter in 2020.

Meanwhile, Meta is investing billions of dollars a year into the metaverse, the yet-to-be developed digital universe that people can access with virtual reality and augmented reality headsets.

Earlier this week, Meta shareholder Brad Gerstner of Altimeter Capital wrote an open letter to Meta, lambasting the company for employing too many workers and spending too much money on the metaverse.

The firm recommends that Meta reduce its head count by 20% and trim its metaverse investment to a maximum of $5 billion a year. Meta’s Reality Labs unit lost more than $10 billion in 2021.

“Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world,” Gerstner wrote in the letter. “In short, Meta needs to get fit and focused.”

On Tuesday, Alphabet reported weaker-than-expected results and said YouTube advertising revenue dropped 2% from a year earlier to $7.07 billion in the third quarter. Ruth Porat, Alphabet’s chief financial officer, said the decline “primarily reflects further pullbacks in advertiser spends.”

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Apple’s new App Store rules over ‘boosted ads’ provoke Facebook again

Meta Platforms CEO Mark Zuckerberg speaks at Georgetown University in Washington on Oct. 17, 2019.

Andrew Caballero-Reynolds | AFP | Getty Images

Apple recently updated its App Store Guidelines with changes that, yet again, impact Facebook’s ad business.

The new rule, introduced Monday, says that companies like Meta, which owns Facebook and Instagram, can offer apps that allow people to buy and manage advertising campaigns in dedicated apps without using Apple’s payment system, but it considers buying an ad in a social media app to be a digital purchase, from which Apple takes a 30% cut.

Meta wasn’t happy with the change. A Meta spokesperson told CNBC, “Apple continues to evolve its policies to grow their own business while undercutting others in the digital economy.”

The episode is the latest skirmish from companies like Meta that feel that Apple has too much power over mobile distribution and the ever expanding and changing rules of Apple’s App Store, which is the only way to install apps on an iPhone.

Meta and Apple have been battling for years, but the rivalry has grown more heated recently after Apple introduced App Tracking Transparency in the iPhone operating system last year. The privacy feature allows users to decline to offer app developers like Meta a unique device ID that can be used to track ad performance. Meta says the change could cost it $10 billion this year.

Meta and Apple also appear poised to compete in the world of consumer hardware, after Meta released the Quest Pro headset and Apple has been developing a competing VR headset for years that could reportedly launch next year.

Apple told CNBC that even before the new guideline the company considered social boosts to be the kind of digital purchase that needed to use Apple in-app purchases, and that the rule is more of a clarification than a new restriction.

“For many years now, the App Store guidelines have been clear that the sale of digital goods and services within an app must use In-App Purchase,” an Apple spokesman told CNBC. “Boosting, which allows an individual or organization to pay to increase the reach of a post or profile, is a digital service — so of course In-App Purchase is required. This has always been the case and there are many examples of apps that do it successfully.”

This individual restriction has long been a sticking point, and Meta, back when it was still named Facebook, negotiated with Apple over social media boosts and whether they would fall under Apple’s digital purchase rules, according to The Wall Street Journal.

Boosting features are offered by several social media companies. But most, like Twitter, already use Apple’s in-app purchase mechanism that lists boosted posts for $9.99 on Apple’s App Store. TikTok sells coins, or a currency used to promote posts, through in-app purchases as well.

For Meta, it thinks Apple’s recent clarification crosses a line in taking a piece of advertising revenue, not just app sales. Meta points to previous Apple executive statements, some made as part of the Epic Games trial over App Store rules, where it said it didn’t take a cut of ads.

“Apple previously said it didn’t take a share of developer advertising revenue, and now apparently changed its mind. We remain committed to offering small businesses simple ways to run ads and grow their businesses on our apps,” the Meta spokesperson told CNBC.

Apple isn’t asking for a cut of every ad served through the Facebook or Instagram apps. But Meta clearly feels targeted by Apple’s increasing power over its platforms, and worries that the company could argue that it deserves a piece of Meta’s total ad sales through its ads manager app, according to The Verge, which first reported Meta’s complaint.

It’s unclear how big the boost market is. Most big advertisers use dedicated portals or apps to buy ads. Eric Seufert, an ads industry watcher and the founder of Mobile Dev Memo, wrote Monday that he suspects it is a “negligible proportion of revenue” to the social media companies.

Facebook shuttle bus drivers face layoffs as Meta slashes costs

A car passes by Facebook’s corporate headquarters location in Menlo Park, California, on March 21, 2018. 

Josh Edelson | AFP | Getty Images

Facebook’s plans to cut costs combined with the company’s relaxed remote work policies set the stage for a bunch of shuttle bus staffers to lose their jobs.

WeDriveU, a key vendor that Meta uses for its commuter shuttles, said it will be reducing staff in and around the social media company’s Silicon Valley headquarters by nearly 100 people beginning in November, according to an employment filing viewed by CNBC. Most are drivers, and some are dispatchers, operations managers and supervisors.

Meta shuttle vendor Hallcon Corporation, meanwhile, said it’s laying off 63 staffers from its San Francisco location around Nov. 25, due to a “significant draw down of client services,” according to a separate filing.

“Some employees may be maintained or recalled to work,” a human resources director at Hallcon wrote in the filing. “However, no Hallcon Company employee who is being laid off should count on being recalled.”

Meta has cut shuttle staffers from other contractor firms as well, according to Stacy Murphy, vice president of Teamsters Bay Area Local 853, a union with over 15,000 members in industries including transportation. Murphy said all of the layoffs are coming from one company: Meta.

Meta janitorial staff protests job cuts.

Silicon Valley Rising

“All four vendors are losing people,” Murphy said, referring to the companies that work with Meta.

The layoffs are landing as Meta looks to cut costs by 10% or more over the coming months in response to macroeconomic challenges and the company’s general underperformance. Meta reported its first-ever revenue decline in the second quarter and is expected to record another drop when third-quarter numbers land next week.

The stock is trading near its lowest since early 2019 and is one of the worst performers this year in the S&P 500.

Bus drivers who shuttled Facebook employees around the Bay Area as the company expanded at a rapid clip over the past decade are in a particularly precarious position. Not only is the company now pulling back on costs but it’s also maintaining more flexibility than its tech peers in allowing employees to work from wherever they want.

The company opened its office back up to employees in March but gave staffers the option to work remote permanently or in a hybrid model. Many of San Francisco’s small businesses are struggling to stay afloat because of the changes in the workplace.

Murphy, along with union members, plan to protest Facebook’s cuts, saying it’s “the worst time” to reduce staff as blue-collar workers face rising costs in a market that remains among the priciest in the country. “It’s crazy,” she said of the rising prices.

Hallcon and WeDriveU did not return requests for comment.

In July, CNBC reported that Meta had canceled a contract with custodial workers at its headquarters, resulting in job cuts. Earlier this month, janitorial service workers rallied outside of Meta Shop, a retail space in Burlingame, California, to protest working conditions as well as the cuts. The rally was organized by a labor coalition called Silicon Valley Rising and South Bay coalition. Workers held up signs that read “Justice for Janitors” and alleged the company isn’t treating its essential workers fairly.

Meta janitorial staff protests job cuts.

Silicon Valley Rising

Murphy said Meta has cut dozens of shuttle staff over the last three months but that the latest notification of layoffs represents “the biggest we’ve ever seen.”

Teamsters organized a rally for Thursday afternoon at the busiest intersection around Facebook’s headquarters to protest Meta’s cutbacks. Murphy said one of the union’s efforts is to put pressure on the company to ask employees to return to offices.

“Other tech companies are demanding they come back — why haven’t they?” Murphy said. “They want to stay at home and that impacts all of the people that support the company’s overall performance.”

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Facebook parent Meta ordered to sell Giphy by UK competition regulator

The logos of Facebook and Giphy.

Aytac Unal | Anadolu Agency via Getty Images

Meta, the owner of Facebook, admitted defeat Tuesday after U.K. competition regulators issued a final verdict ordering the company to sell its animated image-making unit Giphy.

Citing the risk of a substantial lessening of competition in the social media and display advertising market, the Competition and Markets Authority said Tuesday that Meta must “sell GIPHY, in its entirety, to a suitable buyer.”

“We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter,” a Meta spokesperson told CNBC by email.

“We will work closely with the CMA on divesting GIPHY. We are grateful to the GIPHY team during this uncertain time for their business, and wish them every success. We will continue to evaluate opportunities – including through acquisition – to bring innovation and choice to more people in the UK and around the world.”

The $400 million acquisition of Giphy was hardly one of the social media giant’s biggest. It has spent far greater sums on earlier deals, including the $1 billion acquisition of photo-sharing app Instagram and $19 billion buyout of encrypted messaging platform WhatsApp.

But the CMA took issues with the takeover, specifically with the prospect of Giphy relinquishing its own ambitions in digital advertising. The watchdog said this effectively “removed Giphy as a potential challenger in the UK display advertising market.”

The CMA is seeking to become a greater force in the battle among global regulators to rein in Big Tech companies. Alongside the European Commission, it has several ongoing high-profile investigations into the likes of Meta, Google and Apple, and wants powers from the government to levy bigger fines against tech giants over breaches of competition law.

This is a breaking news story, please check back later for more.

Facebook is selling ads in new places on Instagram and Messenger

Onur Dogman | Lightrocket | Getty Images

Facebook parent Meta is opening up new avenues for advertising on Instagram and Messenger as the company seeks to reverse a downward trend in revenue that recently pushed the stock price to its lowest since early 2019.

In an event for advertisers on Monday, Meta introduced a new way for advertisers to display ads on Instagram’s explore page, which shows content to users based on their preferences and routines, and on the profile pages of all public, non-teen Instagram users. As part of a new test of the ad format, select influencers will be able to allow ads to appear on their feeds as a potential source of revenue.

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On the Messenger messaging service, Facebook is launching a tool that uses machine learning software to show ads intended to “reach people who are most likely to make a purchase,” said Maz Sharafi, Meta’s vice president of marketing and growth for business messaging. Sharafi noted that “the important thing here is that we do not use message content for ads,” implying that the company will not analyze Messenger messages to determine which ads get placed.

The announcements come just three weeks before Meta is scheduled to release its third-quarter earnings report, which is expected to show a second straight period of declining revenue. The company gets substantially all of its sales from mobile ads, a business that’s been hammered this year because of Apple’s privacy updates to its operating system as well as a sputtering economy and rising competition from TikTok. Meta’s stock has lost close to 60% of its value this year.

As Meta looks to the future, the company is banking on the emergence of virtual reality and the metaverse to drive growth. It’s now starting to experiment with how advertisers will exist in that world.

Meta said it’s testing augmented reality ads within Instagram’s main feed and stories feature, said Nicola Mendelsohn, Meta’s vice president of the global business group, at the ad event. Most consumers experience AR today when they interact with the digital filters that decorate the photos and videos they see on social media services like Facebook and Snapchat.

“Through the AR experience, brands can encourage people to actually try out and try on that product or interact with effects from their surroundings,” Mendelsohn said.

Another new option for businesses on Instagram is an ad product called multiadvertiser ads that will show users a carousel of related promotions to accompany the original ad. Meta didn’t providing pricing details on any of its new offerings.

One of Facebook’s primary challenges this year has been its hefty investments in its TikTok competitor called Reels, because there isn’t yet an established ad format for short-form, viral videos.

To try to take advantage of the growing popularity of Reels, Meta is debuting what it calls post-loop ads, a new ad format for creators and companies. A creator can run these short video ads of their partners in between their Reels. That feature is only available on the core Facebook app.

Additionally, businesses have the option of embedding a carousel of ads onto the bottom of a creator’s Reels if approved by the creator.

Clarification: This story has been updated to clarify that ads will be rolled out to all Instagram users.

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Facebook scrambles to escape death spiral as users flee, sales drop

Facebook CEO Mark Zuckerberg testifies before the U.S. House Financial Services Committee during An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors hearing on Capitol Hill in Washington on Oct. 23, 2019.

Xinhua News Agency | Getty Images

A year ago, before Facebook had turned Meta, the social media company was sporting a market cap of $1 trillion, putting it in rarefied territory with a handful of U.S. technology giants.

Today the view looks much different. Meta has lost about two-thirds of its value since peaking in September 2021. The stock is trading at its lowest since January 2019 and is about to close out its third straight quarter of double-digit percentage losses. Only four stocks in the S&P 500 are having a worse year.

Facebook’s business was built on network effects — users brought their friends and family members, who told their colleagues, who invited their buddies. Suddenly everyone was convening in one place. Advertisers followed, and the company’s ensuing profits — and they were plentiful — provided the capital to recruit the best and brightest engineers to keep the cycle going.

But in 2022, the cycle has reversed. Users are jumping ship and advertisers are reducing their spending, leaving Meta poised to report its second straight drop in quarterly revenue. Businesses are removing Facebook’s once-ubiquitous social login button from their websites. Recruiting is an emerging challenge, especially as founder and CEO Mark Zuckerberg spends much of his time proselytizing the metaverse, which may be the company’s future but accounts for virtually none of its near-term revenue and is costing billions of dollars a year to build.

Zuckerberg said he hopes that within the next decade, the metaverse “will reach a billion people and “host hundreds of billions of dollars of digital commerce.” He told CNBC’s Jim Cramer in June that the “North Star” is to reach those sorts of figures by the end of the decade and create a “massive economy” around digital goods.

Meta's Mark Zuckerberg on seeing a 'massive economy' around the metaverse

Investors aren’t enthusiastic about it, and the way they’re dumping the stock has some observers questioning if the downward pressure is actually a death spiral from which Meta can’t recover.

“I’m not sure there’s a core business that works anymore at Facebook,” said Laura Martin of Needham, the only analyst among the 45 tracked by FactSet with a sell rating on the stock.

Nobody is suggesting that Facebook is at risk of going out of business. The company still has a dominant position in mobile advertising, and has one of the most profitable business models on the planet. Even with a 36% drop in net income in the latest quarter from the prior year, Meta generated $6.7 billion in profit and ended the period with over $40 billion in cash and marketable securities.

The Wall Street problem for Facebook is that it’s no longer a growth story. Up until this year, that’s the only thing it’s known. The company’s slowest year for revenue growth was the pandemic year of 2020, when it still expanded 22%. Analysts this year are predicting a revenue drop.

The number of daily active users in the U.S. and Canada has fallen in the past two years, from 198 million in mid-2020 to 197 million in the second quarter of this year. Globally, user numbers are up about 10% over that stretch, and are expected to increase 3% a year through 2024, according to FactSet estimates.

“I don’t see it spiraling in terms of cash flows in the next few years, but I’m just worried that they’re not winning the next generation,” said Jeremy Bondy, CEO of app marketing firm Liftoff.

Sales growth is expected to hover in the single digits for the first half of 2023, before ticking back up. But even that bet carries risks. The next generation, as Bondy describes it, is now moving over to TikTok, where users can create and view short, viral videos rather than scrolling past political rants from distant relatives with whom they mistakenly connected on Facebook.

Meta has been trying to mimic TikTok’s success with its short video offering called Reels, which has been a major focus across Facebook and Instagram. Meta plans to increase the amount of algorithmically recommended short videos in users’ Instagram feeds from 15% to 30%, and Bondy speculates the company will likely “get tremendous revenue flow from that” algorithmic shift.

However, Facebook acknowledges it’s early days for monetizing Reels, and it’s not yet clear how well the format works for advertisers. TikTok’s business remains opaque because the company is privately held and owned by China’s ByteDance.

Sheryl Sandberg, who’s leaving the company on Friday after over 14 years as chief operating officer, said in her final earnings call in July that videos are harder than photos in terms of ads and measurement, and that Facebook has to show businesses how to use the ad tools for Reels.

“I think it’s very promising,” Sandberg said, “but we’ve got some hard work ahead of us.”

Skeptics like Martin see Facebook pushing users away from the core news feed, where it makes tons of cash, and toward Reels, where the model is unproven. Martin says Zuckerberg must know something important about where the business is headed.

“He wouldn’t be hurting its revenue at the same time he needs more money, unless he felt like the core business wasn’t strong enough to stand alone,” Martin said. “He must feel he has to try to move his viewership to Reels to compete with TikTok.”

A Facebook spokesperson declined to comment for this story.

Zuckerberg has at least one major reason for concern beyond just stalled user growth and a slowing economy: Apple.

The 2021 iOS privacy update, called App Tracking Transparency, undermined Facebook’s ability to target users with ads, costing the company an estimated $10 billion in revenue this year. Meta is counting on artificial intelligence-powered advertising to eventually make up for Apple’s changes.

That may amount to little more than a band-aid. Chris Curtis, an online marketing expert and consultant, has seen social networks rise and fall as trends change and users move along. And that problem isn’t solvable with AI.

“I’m old enough and I was there when MySpace was a thing,” said Curtis, who previously worked at Anheuser-Busch and McKinsey. “Social networks are switchable, right?”

When you look at Meta’s user numbers, Curtis said, they suggest the company is “not in a good position.”

‘Force for good or evil’

Former Facebook employee and whistleblower Frances Haugen testifies during a Senate Committee on Commerce, Science, and Transportation hearing entitled ‘Protecting Kids Online: Testimony from a Facebook Whistleblower’ on Capitol Hill, in Washington, U.S., October 5, 2021.

Jabin Botsford | Reuters

Denise Lee Yohn, author of brand-building books including “What Great Brands Do” and “Fusion,” said there’s little evidence to suggest that Facebook’s rebranding to Meta late last year has changed public perception of the company.

“I think the company still suffers from a lot of criticism and skepticism about whether they are a force for good or evil,” Yohn said.

Rehabilitating a damaged brand is difficult but not impossible, Yohn said. She noted that in 2009, Domino’s Pizza was able to successfully come back from a crisis. In April of that year, a video made as a prank by two restaurant employees went viral, showing one of them doing disgusting acts with food while cooking in one of the company’s kitchens. Both employees were arrested and charged with food contamination.

In December 2009, Domino’s launched a marketing blitz called the “Pizza Turnaround.” The stock climbed 63% in the first quarter of 2010.

Yohn said the company’s approach was, “We’ve been told our pizzas suck, and so we’re actually going to make substantive changes to what we are offering and change people’s perceptions.” While it sounded initially like “just marketing speak,” Yohn said, “they actually really did change.”

Zuckerberg, on the other hand, is not “coming across as a leader who is serious about changing his culture and about changing himself and about kind of creating a company that will be able to step into the future that he’s envisioning,” she said.

Meta’s reputational hit could also harm the company’s ability to recruit top-tier talent, a stark contrast to a decade ago, when there was no more prized landing spot for a hotshot engineer.

A former Facebook ad executive, who spoke on condition that his name not be used, told CNBC that even though TikTok is owned by a Chinese parent, it now has an edge over Meta when it comes to recruiting because it’s viewed as having less “moral downside.”

Ben Zhao, a computer science professor at University of Chicago, said he’s seeing that play out on the ground as an increasing number of students in his department are showing interest in working for TikTok and ByteDance.

In order to stay competitive, given how the market has punished tech stocks this year, Zhao said Meta and Google are “having to pay more and are having certainly to handout more lucrative stock options and packages.”

The bull case

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Zhao, from University of Chicago, says there’s immense uncertainty surrounding the metaverse’s prospects.

“The real question is — are daily users ready for the metaverse yet?” Zhao said. “Is the underlying technology ready and mature enough to make that transition seamless? That’s a real question and that may not be all up to Facebook or Meta at this point.”

If Zuckerberg is right, perhaps 10 years from now Meta’s stock price from the depths of 2022 will look like the discount of the decade. And if that happens, predictions of a death spiral will be mocked like a 2012 cover story from Barron’s, headlined “Facebook is worth $15” with a thumb pointing down. Four years later, it was trading near $130.

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Climate Club to help employees track emissions; Facebook a customer

Adam Braun and Philip Charm, co-founders of Climate Club

Photographer is Bonnie Rae Mills, photo courtesy Adam Braun

Adam Braun’s first two entrepreneurial ventures had to do with education.

First, he launched Pencils of Promise in 2008, a nonprofit organization that has started more than 500 schools in Ghana, Guatemala, Laos and Nicaragua. In 2017, he launched the education startup MissionU, which WeWork acquired the following year.

Braun’s next venture, Climate Club, is focused on helping large companies engage their employees in reaching their climate goals. The company, which is emerging from stealth on Wednesday, is opening with Facebook parent company Meta and management consulting company Bain among its first pilot customers.

Around a year ago, Braun and his college roommate at Brown, Philip Charm, got together with their 4-year-old children.

“As we were watching our young children play, and really just exploring the world around them, our conversation was drifting into what their future is going to look like, and the life that we want for them ahead,” Braun told CNBC.

That conversation included realizing that by the time their children are as old as Braun and Charm are now, it would be just past 2050.

“Their futures will really be determined by the decisions we make starting now,” he said. “That became this really profound call to action for us, as parents to young children, but also, I would say, as caring citizens, that we had to do something about this.”

At the same time, Braun and Charm were watching large companies across the board make bold decarbonization commitments that employees were mostly ignoring or not involved with. Solving that disconnect is the task of Climate Club.

“The simplest distillation of it is that we embed sustainability into the employee experience. And we do so both with alignment towards net zero, as well as true business goals,” Braun told CNBC.

As part of the company’s launch, Climate Club is also announcing it has raised $6.5 million in seed funding led by XYZ Venture Capital and Vestigo Ventures.

“We believe that Climate Club will be one of the most important tools in the Chief Sustainability Officer’s tech stack,” Chauncey Hamilton, a partner at XYZ, told CNBC. “Corporations have set ambitious goals for hitting Net Zero and keep pushing the timeline up earlier and earlier to meet their goals with lots of companies targeting 2030 or sooner. With increased pressure and regulations ahead, we see it as imperative to create a culture of reducing carbon emissions throughout an enterprise.”

Vestigo Ventures was interested in Climate Club to increase employee satisfaction, helping with recruiting and retention.

“The data is clear that employees want to be at companies that make the world better — and expect more from their employers,” Mark Casady, the founder and general partner at Vestigo Ventures, told CNBC.

Indeed, almost seven in 10 workers care about a company’s environmental track record when considering whether to take a job, according to a Gallup poll conducted in March of 2021. Twenty-four percent of survey respondents said a company’s environmental track record is a major factor in their decision, and 45 percent said it would be a minor factor.

“Climate Club is hitting the market at exactly the right time to enable employers and employees to work together on these goals,” Casady told CNBC. “Climate Club’s combination of software and engagement initiatives solves the challenge of collecting accurate Scope 3 emissions data while enabling reduced costs, measurable carbon reduction, and new pathways to growth.”

Addressing Scope 3 emissions

Climate Club aims to help employees learn what they can and should be doing within the company to reduce carbon emissions and then providing specific recommendations for how they can make changes.

The startup will provide each employee with data tracking their contributions to greenhouse gas emissions. Then, it will give each employee areas to improve, activities they ought to focus on and best practices to follow.

Climate Club focuses on all areas of emissions that employees can influence, but in practice that often turns out to be Scope 3 emissions — those are emissions that are generated throughout a company’s value chain, rather than emitted directly (Scope 1) or through the purchase of electricity or other energy sources used to run the business (Scope 2).

How Google is reducing the carbon footprint of its massive data centers

Scope 3 emissions are hard to track — and also are often the largest category of emissions, according to the EPA. They include emissions that come from assets and activities that are not contained within the boundary of a company but that come from a company’s value chain. That could include emissions associated with purchased goods and services, transportation of goods and services, business travel of employees, commuting of employees, the use of sold products, end-of-life treatments for sold products, and the list goes on.

For example, Climate Club will track emissions associated with things such as business travel, including air travel, ground transportation and hotels. It will help make recommendations for employees’ commutes, and the amount of energy used in remote and hybrid work. It will also track emissions associated with purchased goods and services that employees use, including and starting with food that companies purchase for employees and the associated waste. And Climate Club is working on building solutions tailored for specific job categories, such as engineering, finance, procurement, marketing, human resources and event management.

Getting help wrangling scope 3 emissions is one reason Meta is hiring Climate Club.

“We are launching a pilot of the platform with employees,” Melanie Roe, spokesperson for Meta, told CNBC. “Through our partnership with Climate Club, we will empower Meta employees to understand and participate in the work that needs to be done to reduce scope 3 emissions across our business.”

So too for Bain, which is starting with a pilot in one key U.S. office and plans to add other locations in 2023.

“Bain & Company has long been a leader on sustainability issues, and we are committed to aggressive goals to reduce the impact we have on climate change. The only way we meet these goals is by engaging our teams at the front line, and by providing the tools they need to make good decisions in how they deliver exceptional results for our clients,” Sam Israelit, the chief sustainability officer at Bain, told CNBC. Bain connected with Braun through the company’s alumni network.

In addition to tracking employee-related emissions, Climate Club also collects and organizes ideas that employees have to drive sustainability within the company. That’s already happening at Bain, Braun told CNBC.

“Great examples include reduced emissions travel and commute solutions, employee waste management (food waste & single use plastics), plant-forward meal stipends, work from home energy efficiency solutions, and more,” Braun said.

Degrowth: Is it time to live better with less?

How Mark Zuckerberg can get Facebook ‘back on track’

Mark Zuckerberg’s leadership is putting Meta on track to fail, a Harvard management expert says — but it’s not a lost cause. All Zuckerberg has to do is take a long vacation.

That’s the suggestion for Zuckerberg from Bill George, a senior fellow at Harvard Business School and former CEO of medical technology company Medtronic. George’s most important advice for the Meta co-founder: Take some time away from your work and rest your brain. 

“You need to pull back, take a sabbatical to ground yourself in your purpose and your values,” he tells CNBC Make It. “It can help you and the company get back on track.” 

George has spent the last two decades studying leadership failures, compiling his findings in a new book called “True North: Leading Authentically in Today’s Workplace, Emerging Leader Edition.” He cites Zuckerberg as just one example of a boss who has lost sight of their deeply held beliefs, values and purpose as a leader. Instead, Zuckerberg has become a leader who prioritizes profits, doesn’t accept advice and blames others, according to George. 

George has argued that those failures of leadership have certainly not helped Meta right the ship at a time when the company has lost more than 60% of its market value since last year. Various factors have contributed to Meta’s struggles, including increased competition from rivals like TikTok and an Apple iOS privacy update that’s made it more difficult for Meta to target ads to its users, as well as Zuckerberg’s heavy investment in the burgeoning metaverse space that he admits could lose “significant” amounts of money over the next several years.

George says he still has “a lot of empathy” for Zuckerberg, acknowledging that the “brilliant” CEO has been under an enormous amount of pressure ever since he co-founded Facebook in 2004. 

Zuckerberg has constantly worked to grow his company into a tech behemoth that now boasts a $381.86 billion market cap, as of Thursday morning. He helped build the modern-day social media industry that reaches billions of people each day — and now he’s made a huge bet on the metaverse in the hope that he can repeat his past success by building a new online economy. 

Of course, Zuckerberg’s past success is exactly why he still has plenty of believers, in spite of recent struggles. In February, CNBC’s Jim Cramer said he has “total faith in Mark Zuckerberg” when it comes to Meta’s bet on the metaverse.

George says Zuckerberg’s prior success likely came with its fair share of stress, which is why it’s a “good, healthy idea” for the CEO to take time off now through a sabbatical. 

He recommends Zuckerberg spend a few months away from the company entirely, which means not checking emails, managing team members from afar or doing any other work-related tasks. Zuckerberg should spend that time deeply reflecting about the purpose and future of his company, and what values he needs to ground himself in to improve as a leader, George adds. 

Why a sabbatical may be unlikely for Zuckerberg

But the odds of Zuckerberg actually following George’s advice may be unlikely. A long leave of absence could potentially further drag down Meta’s stock price in the short-term: It could create uncertainty about who would run the company in his absence, and a temporary leadership shakeup in the company could alarm analysts and investors.

Take what happened to Jack Dorsey, the co-founder and former CEO of Twitter, after he announced plans to move to Africa for six months in 2019. Before his plans fell through, Dorsey faced sharp criticism from some analysts who said the move would be “reckless” because “proximity matters” for leading a company.

The closest to a sabbatical that Zuckerberg may get is paternity leave: On Wednesday, he and his wife Priscilla Chan announced they’re expecting their third child. Zuckerberg took paternity leave in 2017 after his second child was born in the summer, breaking it up into two, one-month blocks: immediately after the birth and again in December.

Zuckerberg and Meta did not immediately respond to CNBC Make It’s request for comment. 

Realistic or not, other experts say George’s advice is spot on. DJ DiDonna, who studies sabbaticals and is the founder of research and advocacy nonprofit The Sabbatical Project, even recommends that Zuckerberg travel somewhere far from Meta’s Menlo Park, California headquarters for a sabbatical because “geographic separation” can help him fully disconnect from work. DiDonna adds that engaging in physical or creative activities during that time, whether that’s playing a sport or taking up painting, could help Zuckerberg reignite a genuine sense of passion and energy that he can then apply to his leadership at Meta. 

DiDonna points to his own research, including interviews with dozens of sabbatical-takers over the course of several years, that shows sabbaticals are a “transformational experience” that can help with personal development. In some cases, people can uncover a more authentic version of themselves and see other benefits: A restored sense of enthusiasm for work, more confidence in their voice and a better work-life balance.

“[Zuckerberg’s] literally been thinking about his company since college. He probably has no idea who he is or what his personality has become after all these years,” DiDonna tells CNBC Make It. “Sabbaticals are a way for people like him to disconnect from their routine life, to heal and restore themselves.”

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Facebook down? Users report celebrity spam flooding their feeds

Facebook users complained of an issue that saw random comments made to celebrity Pages appear in their own Feed.

Olivier Douliery | Afp | Getty Images

Facebook parent Meta confirmed Wednesday an issue with the company’s Feed after numerous users reported problems with spam from celebrity pages.

“We’re aware that some people are having trouble with their Facebook Feed. We’re working to get things back to normal as quickly as possible and we apologise for any inconvenience,” a spokesperson for Meta told CNBC.

In an updated statement, a Meta spokesperson said a “configuration change caused some people to have trouble with their Facebook Feed.” The spokesperson added that the issues have been resolved.

Downdetector, a service where people can log problems and outages with websites, had thousands of reports of issues with Facebook, with 81% of complaints related to the Feed.

A number of users commenting on Downdetector and Twitter reported an issue where they would see comments posted by random people on celebrity accounts appearing on their own Feed. CNBC also witnessed the issue when checking the Feed earlier Wednesday.

The Facebook Feed is the main stream of posts of people that you follow.

Meta’s properties last had major issues in October when users were unable to access Facebook, Instagram, WhatsApp and Messenger for several hours. That was caused by backend changes that caused “issues” that interrupted the flow of traffic between routers in Facebook’s data centers around the world, Facebook said.

The social media giant has not elaborated on the reason for the latest glitch.