In the Doomsday scenario, where Facebook continues to spend money on R&D and invest heavily in the Metaverse, with no payoff in higher growth or longer business life from those investments, the value of equity that I obtain is $258.6 billion. Doing the valuation with the Metaverse revenues and expenses removed from the mix yields $330 billion, suggesting that treating the entire Metaverse investment as wasted expenditure reduces Facebook’s value by approximately $71 billion.
The market capitalization of Facebook on October 29, 2022 was $247 billion, below the Doomsday scenario value, indicating that investors were, in fact, treating the $100 billion to be invested in the Metaverse as a wasted expense, a remarkably cynical and pessimistic take on a company that has had a history of delivering profits. The market capitalization has risen to $311 billion as of November 15, 2022, and while that suggests a more positive perspective, that value still reflects a presumption that the Metaverse investment will destroy about $18.9 billion of Facebook’s value.
Full article: https://aswathdamodaran.blogspot.com/2022/11/meta-lesson-3-tell-me-story.html
