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Meta stock rally, Layoffs again, Patent Curiosities

We look at the last layoff to glean what could happen next. Analysis of Meta's key patents

Ahoy Metamates! 🚢 🏴‍☠️

The last few weeks have been turbulent for Meta and beyond - as the markets tumble and banks shutter (even Meta's FRB branch at MPK is now closed), many found themselves in fear when Schwab stock hit the circuit breaker last week. Luckily, this was short lived and everyone's RSUs are safe. What a crazy week!

🆕 The TLDR This Week

  • Morgan Stanley finally upgrades Meta's stock rating - read more here

  • The Greek government spied on a Meta security exec for a year - more here

  • Kustomer may soon divest from Meta - more here

  • Meta buying back $40B in stock, closing the door on major acquisitions this year

Facebook Vets Hated Meta

Everyone who started at Meta prior to 2018 is quietly cheering on the layoffs. It sounds odd, I know, and maybe even very distasteful. But there is certainly a refrain of "we had to work 100x harder during my time" amongst Meta vets.

In Meta 2.0, employees are self-selecting into two camps:

1) The Shareholders

  • Likely started at Meta pre-2018

  • Has vivid memory of being personally dressed down by Mark

  • Starts foaming at the mouth when the "metaverse" is mentioned

2) The Salary Collectors

  • Likely hired during COVID

  • "It's a major inconvenience to go to MPK because I now live in Kentucky"

  • Highly concerned about whether they get a refresher

That's all to say - Mark is going to burn the house down to the ground if he has to make every employee think like a shareholder. That's what the markets need to see right now for the company to still be standing 20 years from now.

Bonus: The new direction of the company is also bringing back senior employees who left Meta for executive seats at midsize tech. The old guard is coming home.

The Carrot is Dead. Long Live the Stick

... and being stern is working out quite well. Despite the enormous risk of announcing a layoff way ahead of time, Meta is seeing broad base support from financial analysts. Even Brian Nowak at MS, who I love to hate for sport, is now a supporter:

Metrics to watch:

  • Meta's shares are up 70% this year ( Refinifitv)

  • Morgan Stanley moves rating back up to overweight

  • Price target for the stock is back to $229 (TR data on top analyst consensus )

  • Meta to buy back $40B of its own stock and reduce costs by $6B this year

The speed of layoffs gives Meta's stock a massive advantage over Google and Amazon, which are both being dragged down for headcount by analysts.

So while we are turning bullish Meta on newly embraced structural discipline, we are also hopeful these actions serve as a broader signal to other tech companies to adopt more incremental discipline

Morgan Stanley analysts wrote in a note to clients.

TLDR: Wall Street always wins - analysts got what they wanted from Mark, which spells a possible rally for the stock.

Who Will Be Affected By the Next Layoff

Folks I asked internally are convinced that cuts will be broad, affecting most teams outside of Ads and Business Messaging. Notably, Kustomer is rumored to be divesting, possibly alongside several smaller workplace bets. FRL bets that are non essential are likely to also see a cut.

But- not all cuts will be made equal:

  • The goal of the layoff is to increase the ratio of engineers to other roles (JPMC)

  • Business roles and recruiting roles have highest risk of layoff

  • Managers with less than 10 directs likely to be down leveled or laid off

  • Transfers and new hiring will remain frozen until after the layoff

My friend Steven Zhang has been looking into the previous layoff quite closely and his data is worth a look ( sharing here with permission):

The aftermath of the Meta Q4'22 Layoff based on California WARN Data

  • ONLY 16 data science employees laid off of 2746 total in California

  • More layoffs at Instagram than at WhatsApp

  • 12 leaders at D1/ D2 level laid off

  • Teams most affected were “AI systems and accelerated platforms”, glasses, XR tech and community teams across multiple verticals

For more data on tech layoffs, follow WARN Tracker here

Special Feature: Meta's Inventing a TON of Stuff

I don't know what you do when you're on a plane, but I love reading patents. They're like riddles- a good patent lawyer will make it nearly impossible for the reader to figure out what exactly is being invented and why.

So- let's talk Meta patents:

  • Meta filed 7507 patents in the last 20 years

  • Growing at a 14.7% CAGR

Over time, the mix of what Meta is inventing has changed significantly towards Optical Elements and Systems, which still occupy the majority of patents in 2023, despite FRL slowdown.

Source: Quant IP, 2023

Fastest moving segments in the last 12 months:

  • Speech processing

  • Holographic processes

  • Gaming

  • Radio Navigation

The slowest growing segment is Data processing, which I find quite curious.

Who Are The Top Inventors at Meta?

Andrew J. Ouderkirk He has so many patents, there's literally a Wikipedia page on him.

  • Filed 121 patents for Meta in the last 3 years ( 4.5% of the company's total patents)

  • Spent 31 years at 3M before joining Meta

  • Leads a team working on optical components and materials

Photo credit: Medium

Debashish Paul A product designer who seems to have been involved in everything at Meta at some point.

  • Named on 88 inventions

  • Left Meta in '21 and currently Pricipal Designer at Patreon

  • A list of inventions here and more on him here

Photo credit: LinkedIn

Lu Lu, Ph.D. Leads R&D at the Optics & Display Technology Incubator @ Meta.

  • 70 inventions in the last 3 years

  • Worked on Polarization Optics & Display Innovation (LCX) team

  • Patents on novel optics miniaturization and advanced display technologies

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