Meta (formerly Facebook), the parent company of Facebook, Instagram, Whatsapp and other social media, announced its results last Wednesday (2nd), and its stock price plummeted 26.7% on the same day, the largest drop since the company went public.
Meta's results show a downward trend in active users on its social media, such as Facebook, and the outlook for ad revenue is worrying.
This Monday (7th), Meta and the British and European regulators set off a dispute over whether to legally send data back to the United States, and threatened to withdraw from the European market. Investors worried that the stock price fell another 5%.
However, Meta's woes are not unique, but reflect a phenomenon common to tech giants.
The growth potential of technology companies at the beginning of development made the market give them a high valuation. However, as the development matures, once the business bottlenecks, it is impossible for the market to maintain the high valuation.
The growth of science and technology enterprises is bottlenecked
Many technology companies of a certain scale are beginning to face industry competition and bottlenecks. For example, after the streaming platform Netflex announced its results on the 21st of last month, the stock price plummeted 22% in one day as user growth began to hit a bottleneck.
For another example, the smartphone market is almost saturated globally, but with a large number of competitors, smartphone manufacturers face great challenges for growth.
For example, Xiaomi’s share price has been falling since the end of 2020 because nearly four thirds of its revenue comes from smartphones, and its share price has been cut in half.
These examples are quite similar to Meta's problem. When the population of countries around the world, especially the more developed countries, has hardly grown significantly, there will be a day when the growth of similar commodities will peak.
According to statistics, smartphone shipments in the global market only increased by 3% last year, and even declined in 2020.
Facebook's user growth has stalled.
(Getty Images)
To ease the pressure on growth, many tech giants are trying to monopolize the market.
Meta started as Facebook and has acquired a number of threatening social media such as Instagram and Whatapps in the past.
However, monopolistic behavior has been targeted by regulatory authorities including China, the United States, and Europe in recent years, making it increasingly difficult to maintain.
Alibaba has been constrained by antitrust measures by Chinese regulators, and its stock price has fallen more than 60% from its record high.
If science and technology companies don’t think ahead and continue to “feed on the old,” even if they perform well, they can only stay successful. Their prospects will be no different from those of old-economy companies, and they will lose their past luster.
In the event that the "paying the old man" does not eat well, the company may even be gradually eliminated by competitors.
Self-help is only innovation
When the growth of old businesses peaks, and the monopoly market becomes increasingly unviable due to regulatory policies, these technology giants are undoubtedly facing a "mid-life crisis."
Many of them try to find new growth points through innovation.
The reason why Facebook changed its name to Meta is to realize the problem of the peak of social media development, and then bet the company's future on the new development path of the "metaverse".
Companies such as Xiaomi joined the ranks of car manufacturers not simply to join the craze of electric vehicles, but to create new value for enterprises in intelligent driving.
Private companies also know that "feeding on the old" is not a long-term solution, and must constantly innovate in order to maintain development.
Looking back, Hong Kong's development is also faced with problems such as rapid growth and competition in other regions. Hong Kong also needs innovation to solve problems.
Of course, innovation has risks, and it is not smooth sailing in the middle, but it is better than continuing to "eat the old".
Facing the ever-changing international environment, Hong Kong should also actively transform itself and seek new development directions through innovation.
SenseTime demonstrates the success and inadequacy of Hong Kong's innovation and technology model, Hong Kong bets on innovation and technology, the government should emancipate the mind system and use financial technology to promote the transformation and upgrading of Hong Kong's industries｜Yu Pinhai