Meta

Business Intelligence & Competitive Analysis

Supriya Mamidi

Supply Chain Management Major

Rutgers Business School - Newark

Meta 2019   

• Meta Platform is building products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and in-home devices

• Co.'s products include: Facebook, Instagram, Messenger, WhatsApp, and Facebook Reality Labs

• Co. sells advertising placements to marketers. Co.'s ads enable marketers to reach people based on a variety of factors including age, gender, location, interests, and behaviors

Chart Analysis

• Meta's stock is the lowest priced on the graph
• Pinterest stock is the second lowest priced
• Twitter's stock is the third lowest priced
• Apple's stock price is the highest compared to Meta, S&P 500, Pinterest, and Twitter
• The S&P 500 has the second-highest stock price after Apple

Management Consulting

• Meta is clearly in trouble!

• Problems? Causes and opportunities? 

• Business intelligence and competitive analysis
  • Competition positioning
  • Strengths and weaknesses
  • Problems, causes, and opportunities

Business Intelligence and Competitive Analysis

1. Industry Analysis - business, GIS, industry trend, competition intensity, value chain analysis

2. Competitive positioning - where do I stand in the competitive landscape

3. Enterprise diagnosis - strengths and weaknesses, value drivers & breakdown analysis

How do I know that I have a problem? 

• The market value of Meta has decreased due to the decline in its share price

Global Competition Positioning System (GCPS)

• Where - Business Geographic Information System (GIS) 
  • Benchmark region
  • Where is money/risk/job?

• Which - Industry Analysis 
  • Benchmark industry
  • In which industry can we make more money with less effort? 

• How - Enterprise Diagnosis  
  • Benchmark company
  • Competition positioning - strength and weakness? causes? 
    
    
    
    

Industry Overview

• Geographic information, Concentration, and Competition intensity

Enterprise Distribution Results 

• In 2021, the total number of internet software enterprises is the most in California

Typical Firm Performance by Region - Profit Distribution

• In 2021, internet software companies located in Washington had the highest median revenue

Results 

• In 2015-2021, Apple has the most amount of total revenue compared to its competitors

• In 2015-2021, Meta has the second largest amount of total revenue compared to its competitors

Concentration and Competition Intensity

•  the US Internet software and services industry is more concentrated than China

Industrial Analysis I

• What is the trend of the industry? 

Industrial Trend

• Internet Software & Service companies in the US have a higher total revenue compared to their competitors in China 

•  Internet Software & Service companies in the US have a higher operating income compared to their competitors in China

• Internet Software & Service companies in the US have a higher operating income compared to their competitors in China

• The proportion of profitable Internet Software & Service companies in the US decreased 

Industrial Trend - Profitability

• Internet Software and Service companies in the US had a higher median gross margin than their competitors in China 

• Overall, the median operating margin and the median net margin was higher for Internet Software and Service Companies in China compared to the US 

Industrial Trend - Efficiency 

•  Internet Software and Services in China had a higher median return on assets compared to their competitors in the US 

• Overall, Internet Software and Services in US had a higher median asset turnover compared to their competitors in China 

Results of Industrial Trend - Financial Health

• Overall, the median liability asset ratio is higher for internet software & service companies in the US compared to China

• Overall, the median current ratio is higher for internet software & service companies in China compared to the US

Industry Analysis II

• Where does my industry stand in the value chain?

Supply Chain Mapping - Median Total Revenue

Supply Chain Mapping Median Total Revenue 

• In 2021, diversified banks have the highest median total revenue 

Supply Chain Mapping - Median Net Margin 

SC Mapping - Median Net Margin

• In 2021, asset management and custody banks have the highest median net margin

Supply Chain Mapping - Median Return on Assets

Results of SC Mapping - Median Return on Assets 

• In 2021, asset management and custody banks have the highest median return on assets

Competition Positioning I 

• Where do I stand in the competition landscape? 

Results of Revenue v. Cost

• Internet software and services in the US is higher in terms of revenue and cost compared to their competitors in China

Profit vs. Cost - Operating Income

Operating Profit vs Total Assets 

• In the US, there is a positive correlation between the total assets and operating income or loss

Operating Margin vs. Revenue

• In 2021, at an operating margin of 0, Meta has a total revenue of about $120,000

• In 2021, Google beats Uber, Netflix, and Meta with a total revenue of about $260,000 at the operating margin of 0

Return on Assets vs. Liability Asset Ratio

• In 2021, overall, internet software and service companies have a low liability asset ratio and low return on assets

Competition Positioning II

• Rankings

Enterprise Ranking - Total Revenue

• In 2021, Meta has the second highest total revenue compared to other internet software and service companies 

Enterprise Ranking - Operating Margin

• In 2021, Meta has the fourth highest operating margin compared to other internet software and service companies

Results of Enterprise Ranking - ROA

• In 2021, Meta has the second highest return on assets compared to its competitors 

Results 

• In 2021, comparing internet software, wireless telecommunication services, pharmaceutical, and cable & satellite industries, two of these industries have no return on assets, one of these industries with 227 enterprises has less than 0 return on assets and 74 enterprises in one of these industries gets around 0-1000 return on assets 

Enterprise Diagnosis I

• What is my strength and weakness? 

Major Competitors to Meta

• Google
• Snap
• Twitter
• Pinterest

Results 

• In 2021, Meta has a bigger enterprise size than Twitter, but a smaller enterprise size than Alphabet

Results 

• In 2021, Meta has the biggest profitability compared to its competitors in the following categories: gross margin, return on assets, operating margin, and net margin 

Results

• In 2021, Meta has the highest return on assets compared to its competitors in return on equity, return on invested capital, and return on assets

Results 

• In 2021, Meta's highest measure is for payable days/receivable days

Results

• In 2021, as confirmed by the previous data, Meta outperforms it competitors in measures such as operating margin, net margin, return on assets, and return on invested capital

Enterprise Diagonsis II 

• Company level trend

Results

• Meta has the highest operating margin, gross margin, net margin, and return on assets compared to its competitors

Results 

• Meta's current ratio decreases
• Meta has a low long term debt ratio
• Meta has a low liability asset ratio

Results

• Overall

  • Meta's cash conversion cycle has been decreasing

  • Meta's labor productivity has increased

  • Meta's receivable days has increased 

Value Driver Analysis and Breakdown

• Causes and drivers

Results

• The green and orange lines show that there was a negative slope and therefore as liability asset ratio decreased so did the operating margin

Results 

• The red and green lines show that there is a negative correlation between liability asset ratio and return on assets

Result

• In 2021, Meta has the highest net income compared to its competitors
• In 2021, Meta does not have other costs other than COGS, income tax expense, and SG&A expenses

Results 

• In 2021, Meta has the highest total stockholder equity compared to its competitors

Results 

• In 2021, Meta has the most property plant and equipment compared to its competitors
• In 2021, Meta has the least net receivables compared to its competitors

Insights 

• Meta has the lowest total revenue growth rate tied with Twitter at 0.37
• Meta's return on assets is low at 0.237
• Meta's return on invested capital is 0.315
• Meta's cash conversion cycle is -134.415
• By looking at these four key performance indicators, we can observe that the first three measures are close to 0 and a negative cash conversion cycle suggests that it would be harder for Meta to finance investments in the future
• Since Meta has proved that its total revenue growth, return on assets, and return on invested capital will not increase, the public doubts that Meta will do well financially in upcoming years as it has analyzed it's quarterly earning reports
• Hence, the public is not buying Meta's stock and neither are investors
• Meta's market value went down as a result of the decrease in its stock price per share 
• Due to Meta's profitability, the public has categorized it as a low performing stock worth only $113  

Conclusion

• Meta has the second highest total revenue after Apple and takes up only 30% of the revenue in the internet software and services market
• In this industry in the US, in 2021 the total operating income or loss is 0
• The proportion of profitable enterprises has decreased overall from 2015-2021 
• In the US, in this industry, in 2021, the median operating margin and median net margin is below 0
• In the US, in this industry, in 2021, the median return on assets is below 0
• In the US, in this industry, in 2021, the median total cash flow from operating activities is 0
• Meta's total revenue growth rate is low at 0.37
• Due to these disappointing statistics, Meta's stock went down because of its poor metrics on its earnings reports 
• But, Meta is still a well known social media platform used in this modern world
• Meta (Facebook) seems to be performing well on profitability, it is also healthy financially. Overall, it is very competitive
• Issues - maybe its slowing-down growth in revenue and net income, another possibility is that its stock was way over-priced before