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yuan43 | 3 years ago

> “I had hoped the economy would have more clearly stabilized by now, but from what we're seeing it doesn't yet seem like it has, so we want to plan somewhat conservatively,” Zuckerberg said. A Meta spokesperson declined to comment.

The economy is stabilizing. It's being weaned off of ultra-loose money for the first time in years. The stock market is starting to behave more rationally, demanding that a company whose earnings potential is sinking and which offers no dividend be valued accordingly.

> ... Meta had more than 83,500 employees as of June 30, and added 5,700 new hires in the second quarter. ...

FWIW, 28 % annualized hiring growth for a company the size and age of Meta is not normal. It's a sign of mismanagement and especially loss of focus.

discuss

order

beambot|3 years ago

A little dated [2018], but still rings true: The average tenure for engineers at many major tech companies is ~3 years. Thus, you'd expect new hires at a rate of 30% annually just to maintain staffing levels. To determine headcount growth you, should look at year-over-year changes in total employee count, not just the number of new hires. TLDR: Meta's new-hire rate is not atypical.

https://www.businessinsider.com/average-employee-tenure-rete...

brilee|3 years ago

3 years is deceptive - in an exponentially growing company, the majority of employees are fresh, pushing the average tenure low. The relevant number is "length of tenure at time of severance", which I believe skews much higher. Any company seeing 30% churn is having a bad, bad time.

tclancy|3 years ago

Based on my limited observations having been in a similar situation for a year, I would guess the average tenure is Equity Award Years less percentage of people who get fired in less than the value of Equity Award Years.

It’s a good way to keep reinventing wheels.

Cthulhu_|3 years ago

And this 3 years is kept up artificially - companes like Meta or, as a colleague of mine who works there now, Github / Microsoft, offer stock packages that they can only use after four years. It's a pair of golden handcuffs; they would move on a lot faster I'm sure if it wasn't for that + the wages offered.

Having Microsoft or Google or Meta on your CV is a very valuable thing to have, regardless of what you actually did there, because they're still perceived as having high standards.

BurningFrog|3 years ago

> The economy is stabilizing.

The economy is in the early phases of the biggest Fed tightening since at least the 1980s.

If you know where that will end up, congrats. For the rest of us, it's very much uncharted waters.

dragontamer|3 years ago

> The economy is in the early phases of the biggest Fed tightening since at least the 1980s.

But the 2010s through 2020s period is a myth, a figment of cheap money. This money was made cheap to help us get out of the 2007/2008 recession, but the cheap money clearly went on too long.

Its warped all of our thinking. We should have been raising rates and paying down the Fed's balance sheet a long, long time ago. To be fair, we began the process in 2019, but COVID19 wrecked us in 2020.

Now its 2022 and inflation is growing out of control. We have no choice but to raise rates now.

eftychis|3 years ago

Yeah and if he does know please share that with everyone else (people ok with terrifying news at least).

We are not stabilizing. There are serious supply issues, staffing issues, wild currency fluctuations, and fear -- including of nuclear conflict.

I am not sure in what world this is stabilization. It is easy to hit on the "mule" i.e. the average Joe and say "I gave you too much money, that you never saw, thus why Yada Yada, so learn not to eat and that will work fine." This is the naive explanation offered to the public masses to make them feel bad and that they deserve the recession. Aka anything to avoid political suicide. Other countries don't go out saying this fyi-- because e.g. they have a freaking war in the doorsteps during a pandemic and can't produce goods, because no natural gas. Because of sabotage.

Only stabilization is to the bottom.

Rapzid|3 years ago

That's what I'm hearing; we didn't dodge a recession it just hasn't started yet.

In TX energy prices are already up a lot this year. We generate a substantial percentage of electricity from natural gas, and exports are up for obvious reasons.

Winter is coming.

tjr225|3 years ago

NASDAQ is UP 20 or so % from just before the pandemic. That’s how inflated things got in the last two years. The person you’re responding to is right on the money.

majormajor|3 years ago

"uncharted waters" is so tired.

When's the last time they were "charted" economically? Things have been changing constantly for a century, basically.

mbesto|3 years ago

> For the rest of us, it's very much uncharted waters.

Aren't economies all uncharted waters until they aren't (e.g. hindsight)? 2 years ago we hit a global pandemic and tech stocks were trading at absurd PE levels 6 months later. So, no one really knows "where this will end up".

gwbas1c|3 years ago

> The economy is stabilizing. It's being weaned off of ultra-loose money for the first time in years.

You might enjoy reading "Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail", https://www.amazon.com/Changing-World-Order-Nations-Succeed-... (The author is Ray Dalio, one of the US's best institutional investors.)

The big question is, when are we going to hit bottom? We need to make it through the Ukraine and Taiwan situations before things really bounce back.

UncleOxidant|3 years ago

> and Taiwan situations

Let's hope we don't get a Taiwan situation on top of all of the other stuff that's going on. That way lies WWIII.

thecoppinger|3 years ago

Seconding this, I’m reading the book at the moment and it’s an exceptional insight into the near and long term future. It’s also terrifying.

itsoktocry|3 years ago

>*The economy is stabilizing.*

The economy is never "stable". It is constantly in a cycle of ups and downs, over-investment and under-investment, easy money and tight money...

The current state is no more "normal" than any other period.

mym1990|3 years ago

The economy most definitely experiences stability when people and business are able to have a reasonable amount of confidence that things don't hit the fan at any second now. This stability allows people to invest with more freedom, take more risk, and grow at a stable rate.

Of course this behavior eventually overheats...but in terms of expectations there is definitely a stable state to an economy, even if it only last a few years.

SantalBlush|3 years ago

>The economy is never "stable". It is constantly in a cycle of ups and downs, over-investment and under-investment, easy money and tight money...

That's pedantic and beside the point. The question is whether the economy experiences periods of relative stability. The answer is yes.

rightbyte|3 years ago

Zero is a special value you know, since zero times anything is zero.

Edit: Except infinity ...

colinmhayes|3 years ago

> which offers no dividend be valued accordingly.

FWIW Meta has apparently done $15 billion in buybacks this year which gives them a 4% yield at current cap. Investors generally prefer buybacks to dividends because of tax advantages, so this should actually have helped their stock more than a 4% div yield would.

adam_arthur|3 years ago

A 4% yield is not very good when you can buy risk free treasuries yielding more.

Meta's shares outstanding have barely changed over time. Issuing equity to employees dilutes share count, buybacks counter this somewhat.

https://www.macrotrends.net/stocks/charts/META/meta-platform...

At current valuation multiples buybacks are pretty smart for Meta, but many of these companies were doing buybacks at 3% yield valuations

motbus3|3 years ago

I agree with you. But I also think this companies have potential for earning money. Real money. FB has incredible aí models and platforms as well as interesting hw products. But they keep pushing publicity for creepy projects such as their second life version.

So what happens is that they have tons of fantastic things they do not properly use.

I also think that media has chosen Zuckerberg to hit. Yeah. Lots of contradictions etc, but if anything, he is not stupid.

tsimionescu|3 years ago

> Lots of contradictions etc, but if anything, he is not stupid.

What makes you think that? Especially after just pointing out that the strategy he himself has put front and center as the present and future of Facebook (Meta) is "creepy", when you think they have other things that could generate money?

notacoward|3 years ago

I get 37% based on what it was when I started in 2017, and that's net over attrition during the same time. Absolutely crazy. They need to not only clear out some deadwood but also change their engineering/evaluation practices so they don't have 10K engineers working on projects that only exist because of NIH syndrome and/or impact whoring.

thr0wawayf00|3 years ago

> It's a sign of mismanagement and especially loss of focus.

I think it's a natural symptom of running a company built on exploiting people's desire to craft and control their own image. It's corporate narcissism. Zuckerberg has been invincible for so long, how could he not be consumed by the reality distortion field himself?

defterGoose|3 years ago

Ooh, careful saying anything negative about social media or tech companies here. /s

shubb|3 years ago

Remember that buybacks are another way of returning money to shareholders, and Meta bought 10% of it's shares this year. A 10% yield is pretty significant and reflects its high PE ratio.

However, they took on 10bn in debt this summer, joining Apple and the other FANGS. These companies claim to have high margins.

For me, if Apple claims to make a 20% margin, but then spends all that money and needs to borrow more, and its revenues are shrinking - that's not a growth stock and that's not an honest earnings. If you need to spend the money to continue to make sales, it's part of your operating costs. If you need to borrow money to continue to operate, you don't have a margin.

At least Meta is genuinely spending its borrowed money on future growth (trying to build this VR thing) and is continuing to grow revenue in local currency terms . We might not believe it would work, but it's honest margin. Not a zero profit growth stock - yet.

I think we are in a wierd situation where some companies are being more honest than others, and the honest ones will be punished until the pendulum swings in the next 2 quaters.

gwd|3 years ago

> For me, if Apple claims to make a 20% margin, but then spends all that money and needs to borrow more...

NB that having a large cash reserve and borrowing more money are not mutually exclusive. From a large company's perspective, borrowing money when times are good and money is easy to get are low gives the company a "war chest" to either be able to suddenly invest money quickly should the need arise, or to weather long drawn-out storms, when times are bad and money is hard to get.

EDIT: Apple has around $100B in debt, and around $202 billion in cash reserves; it could pay off its debt tomorrow if it wanted to; but then it would have "only" $100B in cash.

deepGem|3 years ago

Going by the current inflation and unemployment trends, the economy won't stabilize for a year at the very least. We have a very difficult situation. Inflation is high, unemployment is low. In 2008, we had low inflation and high unemployment, but not this time. So, with the tightening of interest rates, unemployment has to go high. With unemployment increasing, prices of goods will fall due to decrease in demand. At that time, hopefully inflation will go on a downward trend.

The expected inflation in US is around 2-3% and until we see inflation heading towards those numbers it's hard to say economy is stabilizing.

For comparison, the expected inflation in India is around 8-10% and that's why you don't see the pinch in the Indian economy right now even with the tightening of rates.

I am no predictor of the future, but more likely the US interest rates will hit the range of 10% before we start seeing any easing in inflation. Once we see unemployment numbers going up consistently for a couple of quarters that will be the sign of economic stabilization I think.

adam_arthur|3 years ago

The low inflation and high unemployment in 2008 came after Fed tightening took effect and the recession was in full force.

We'll almost certainly see the same thing this time within the next year.

The Fed let employment velocity and unemployment go far too low to avoid a severe recession. They should have started tightening far earlier

tsimionescu|3 years ago

Why are you speaking as if high unemployment is better than high inflation?

UncleOxidant|3 years ago

> The economy is stabilizing. It's being weaned off of ultra-loose money for the first time in years. The stock market is starting to behave more rationally, demanding that a company whose earnings potential is sinking and which offers no dividend be valued accordingly.

Agree with the latter part of your statement, but no way have we hit "stability". Yes, taking away the ultra-loose money policy had to happen, but doing so has perturbed the system and it's going to take a while to stabilize.