What Crypto Investors Can Learn From Facebook’s Struggles (Instagram, Too)

Did you hear that Meta Platforms (NASDAQ:META) is changing Facebook and Instagram to “elevate content from creators over posts from friends and family”? What a sign of the times: Meta feels it has to ditch what made Facebook unique – and turn Instagram into TikTok!

Logos for social media apps displayed on an iPhone screen.
Source: mama_mia / Shutterstock.com

Last night, we learned why. Here are the details revealed in META’s earnings report…what investors in the next iteration of the internet – Web3 – should learn from this…and why it makes the likes of Theta Network (THETA-USD) even more compelling.

Meta Platform’s Q2 Financial “Highlights”

Overall, this was not what they call a barn-burner quarter for the Meta Platforms formerly known as Facebook. Revenues of $28.8 billion were pretty flat, year-over-year, and diluted earnings per share was $2.46. That was a few cents less than analysts expected – and 32% less than the year-ago quarter!

Compared to Q2 of 2021, Facebook users were pretty flat on both monthly and daily activity: +1% and +3%, respectively.

Across the entire “Family of Apps,” it was +4%. Ad revenues (which is most of them) improved from Q1 – but were still -1.5%, year-over-year, while ad prices were -14%. This is the “ad recession” that Luke Lango, for one, brought our attention to in May.

Expenses continued to climb, especially in Research & Development, as Meta prepares to release those fancy new virtual-reality headsets in “Project Cambria.” Hence the earnings decline.

Mark Zuckerberg – who I’m sure would rather be talking about the metaverse – focused a lot on Reels in his opening comments as CEO.

If you’re not big into Instagram or Facebook videos: Reels are 90 seconds long, while Stories are 15 seconds. So, your friend might use a Story to show a concert experience or funny screenshot… While Reels are more for content creators, like on TikTok.

“This quarter, we saw a more than 30% increase in the time that people spent engaging with Reels across Facebook and Instagram,” said Zuckerberg. But mainly the latter: “In Instagram, for example, we see that Reels makes up more than half of content reshared in messages.”

Unfortunately, “Reels doesn’t yet monetize at the same rate as Feed or Stories, [but] we’re confident that Reels will grow engagement overall and quality will eventually monetize closer to Feed.”

Meanwhile… Let’s compare to what’s going on at Tik Tok.

While FB/Instagram growth is flat:

  • TikTok users are expected to gain +50% this year!
  • Already, half of other apps’ users are on TikTok…
  • Which beats Instagram among Gen Z users. (So does Snapchat.)

Engagement is no problem at TikTok:

  • Users average nearly 11 minutes per session…
  • Versus five minutes or less for everyone else.

As for monetization:

  • TikTok expects to triple revenues this year, overall…
  • And TikTok was #1 in consumer spending in 2021. (Up +77% from 2020!)

The Bottom Line on Today’s Internet

Why is this random short-video app from China crushing on growth and engagement? Especially when no one over 40 seems to be on it?

It must be because TikTok offers something that the others don’t:

Facebook is where you hear what your family and friends are doing and reading – mostly text.

Instagram is where you’ll probably see their photos. (Although now I get just as many reposts of TikTok videos there!)

But TikTok just serves up an addictive, infinite loop of videos.

Most of your friends and family aren’t great at video. I know I’m not… Especially compared to comedians, musicians, lifestyle bloggers, and anyone else who makes this their livelihood!

But “content is king,” as Sumner Redstone of Viacom/CBS liked to say. This attitude won him an empire so large that his family and executives didn’t stop fighting over it for two decades. (If you’ve watched “Succession” on rival network HBO, you’ve got the idea.)

If Redstone was starting out in the 2020s instead of the 1950s… He’d have his eyes on streaming services for his next hostile takeover. Not a social-media brand. “People don’t watch CBS; they watch what’s on it,” he added in 2000. Today, they follow their favorite creators and influencers across all apps – but video is best.

Video Platform of the Web3 Future

For our Crypto Investor Network portfolio, therefore, our team isn’t interested in a “Facebook of the blockchain.” Our analysts like Theta Network (THETA-USD), a blockchain that specializes in video and livestream apps.

“Theta Network is kind of like a mashup of Amazon Web Services, Twitch, and OpenSea,” explain Luke Lango and Charlie Shrem. “It has something to offer everyone in the Web3 space when it comes to video, and it’s tapping into a massive (and growing) market.”

How? Because it appeals to up-and-coming stars with a 60% cheaper service… While partnering with big names from MGM and Lionsgate to Katy Perry to the World Poker Tour.

Theta has also been around since 2018 – which is real longevity in crypto – and has over 130,000 nodes (or participants in its blockchain network). This is “essential for network security and performance [and] some of these nodes are run by huge names in tech including Google, Sony, Samsung, and Binance,” note Luke and Charlie for our Crypto Investor Network.

Theta’s technology for not only streaming and storing video, but using NFTs, VR – and doing it all in an edge-computing environment (versus a Big Tech server) – is pretty intriguing. Luke and Charlie did a great rundown in Crypto Investor Network… writing how Theta’s tech is interoperable with bigger blockchains, and has over a dozen patents involved.

As Theta Network builds out its APIs and infrastructure, video apps there could rank right up there with Twitch, YouTube, and TikTok.

As such, THETA is among the five Strong Buys Luke and Charlie recently announced in their members’ portfolio. This Saturday, they’ll alert members to another crypto – with a major catalyst that could have prices exploding higher.

Watch Charlie’s free presentation now for more dates to mark on your calendar…plus 4 crypto fundamentals Charlie used to find his most legendary winners.

On the date of publication, Ashley Cassell 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. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.

Article printed from InvestorPlace Media, https://investorplace.com/newdigitalworld/2022/07/what-crypto-investors-can-learn-from-facebooks-struggles-instagram-too/.

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