A good valuation is a bridge between stories and numbers, and Facebook's story through much of the decade has been simple and compelling, built around billions of intense users who share data about themselves, with that data being used to deliver focused advertising. That story has delivered operating results and allowed the company's market capitalization to surge over between 2012 to 2021. That story is running out of steam, partly because of the backlash on the privacy front and partly because the online ad market is leveling off. Facebook, faced with a choice, has decided to bet big on the Metaverse, but investors seem unimpressed, pricing the company on the presumption that the investment will not pay off. During the session, I argue that Facebook is facing a trust deficit that it can begin to overcome only by telling a business story that justifies the huge investments, with trackers and targets on how it plans to deliver on the story.
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Slides: https://www.stern.nyu.edu/~adamodar/p...
Blog Post: https://aswathdamodaran.blogspot.com/...
Metaverse value effect: https://www.stern.nyu.edu/~adamodar/p...