The ‘Meta’ Name Change Won’t Help Facebook Evade Its Prior Issues

While his billionaire peers were working on launching themselves into space, Mark Zuckerberg has been working on something very different. Last week, Facebook changed its name to Meta Platforms (NASDAQ:FB). FB stock has climbed more than 4% after the announcement.

Meta logo is shown on a device screen. Meta is the new corporate name of Facebook.

Source: Blue Planet Studio / Shutterstock.com

The name change serves to signal the company’s transformation from a social networking platform to a “metaverse company” blending immersive virtual experiences with reality.

The move also demotes Facebook’s namesake service to being just one of the company’s subsidiaries, alongside Instagram and WhatsApp, rather than the overarching brand.

Company name changes and rebrands are nothing new, as demonstrated by Google’s shift to Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) or Snapchat’s shift to Snap (NYSE:SNAP). But when a company rebrand appears to divert attention from brand-tarnishing revelations, it’s easy to see how Meta’s strategy seems to have stolen a page from Big Tobacco’s playbook.

In fact, many observers are likening Facebook’s Meta rebrand to Philip Morris, which over two decades ago announced its intent to change its name to the Altria Group (NYSE:MO).

In the same way that Phillips leveraged a public relations campaign to divert attention away from the “bad stuff” it does (i.e., sell deadly tobacco products), it’s clear to see how Facebook’s rebrand similarly hopes to overcome a series of unfortunate events — ranging from misinformation on its platforms, inadequate content moderation efforts and a whistleblower’s revelations about the negative effects of social media on mental health.

Much like the public health outcry nicotine and tar, the “bad stuff” here is Facebook’s products — from Instagram to WhatsApp to Groups — which have all the subject of scandals around data privacy, hate speech and misinformation. They’ve also been proven to inflict societal harm. Coupled with the fact that Meta’s vision of an “embodied internet” is likely decades away, today’s rebrand appears even more like a band-aid solution.

With that in mind, here’s a closer look at what might come next for FB stock.

FB Stock: What Is a Metaverse, Anyway? 

Facebook’s iconic thumbs-up sign at its Menlo Park, California, headquarters now bears a blue infinity-shaped symbol along with its new name. But according to Zuckerberg, the Meta rebranding announcement is a formalization. It represents a shift that has been underway at the company for several years. Meta calls it an “embodied internet.” Simply put, that’s supposed to mean a place we are “in.” It’s a shift away from a stream of photos, words and videos — content — that we simply watch. 

Last week, Meta announced that it would spend about $10 billion on metaverse-related investments in 2021. The company has also been steadily acquiring virtual reality (VR) start-ups and already has more than 10,000 people working on augmented reality (AR) and virtual reality projects in its new Reality Labs division. That’s roughly twice the entire staff at Twitter (NYSE:TWTR).

Meta plans to hire 10,000 more employees in Europe soon. However, despite the investment and strategic focus, it might take decades to deliver the many technologies needed for Zuckerberg’s vision of the metaverse. 

A Rose By Any Other Name

Meta’s strategic re-direction may change the narrative … for now. But without any real foundational change, the company may be destined to repeat the practices that got the company into trouble in the first place. Facebook’s former mantra — “move fast and break things” — nurtured a culture that promoted new ideas without careful consideration of the risks. The idea is that if you aren’t breaking things you’re creating value too slowly.

The metaverse may be a new frontier. But it may also be a new playground for Facebook’s same old problems to take root. A name change doesn’t erase whistleblower Frances Haugen’s Congressional testimony that Facebook always chooses what’s best for its bottom line over public health and safety. Facebook has been blamed for everything from destroying democracy to body shaming.

At the same time, the company doesn’t have a strong track record for protecting the privacy and safety of its users

Zuckerberg said in a recent note to employees that the company is committed to doing more research and isn’t suppressing data. “If we wanted to hide our results, why would we have established an industry-leading standard for transparency and reporting on what we’re doing?” he wrote. But so far, Meta hasn’t released any meaningful information around the connection between social media and mental health.

None of Meta’s (Facebook’s) issues disappear in the metaverse. In fact, Meta is already collecting huge amounts of user data through its existing virtual reality products, including information about users’ physical features and the digital objects and audio they create in VR.

The Bottom Line on Meta

All we have is Zuckerberg’s word that his company will develop the metaverse while prioritizing privacy, security and other core values. But what Meta needs, at minimum, is real, difficult and foundational change.

In other words, Meta needs to earn back our trust. Otherwise, the same issues FB stock owners were dealing with prior to the name change will plague Meta.

Meta plans to begin trading under the stock ticker “MVRS” on Dec. 1. New name; same problems.

Your comments and feedback are always welcome. Let’s continue the discussion. Email me at jmakris@investorplace.com.

On the date of publication, Joanna Makris did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joanna Makris is a Market Analyst at InvestorPlace.com. A strategic thinker and fundamental public equity investor, Joanna leverages over 20 years of experience on Wall Street covering various segments of the Technology, Media, and Telecom sectors at several global investment banks, including Mizuho Securities and Canaccord Genuity.

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