Starting Dec. 1, the world’s most popular social media company, Facebook Inc. (FB, Financial), will be changing its corporate name to Meta.
Founder and CEO Mark Zuckerberg made the announcement during the Menlo Park, California-based company’s augmented and virtual reality conference called Facebook Connect, which was a fitting setting seeing as the rebrand will shift its focus to the so-called “metaverse.”
The metaverse is defined as a speculative future iteration of the internet, made up of persistent, shared, 3-D virtual spaces linked into a perceived virtual universe. In a broader sense, it may not only refer to virtual worlds, but the internet as a whole, including the entire spectrum of augmented reality. Examples of this sci-fi concept in pop culture today is the book turned movie “Ready Player One” and, to an extreme, “The Matrix.”
“Today we are seen as a social media company, but in our DNA we are a company that builds technology to connect people, and the metaverse is the next frontier just like social networking was when we got started,” Zuckerberg said.
While its vision is expected to come to fruition within the next decade, Facebook already has big plans, including wearable tech, photorealistic avatars and collaborations with digital artists.
The stock ticker will also change to “MVRS” to reflect its new name. Facebook emphasized that while its corporate structure is not changing, how it reports its financials will. Starting with results for fourth-quarter 2021, it will report two operating segments: Family of Apps and Reality Labs.
Repairing its image?
The name change comes amid a barrage of reports over the past month after Frances Haugen, a former employee turned whistleblower, released internal company documents to news outlets, lawmakers and regulators.
This is not the only negative press coverage the company has had in recent years, however. In 2018, Facebook was found to have breached data protection laws by failing to keep its users’ information secure, allowing British consulting firm Cambridge Analytica to harvest personal data for up to 87 million people without their knowledge or consent.
More recently, it has faced criticism for censoring individuals, media outlets and even public servants on its various platforms.
As a result, Facebook may be using the name change as a way to restore its reputation.
According to branding and social media marketing expert Eric Dahan, co-founder and CEO of Open Influence, repairing Facebook’s marred image will likely prove to be a difficult task.
"Facebook is on a quest for a name that broadly encapsulates its ecosystem of apps (Instagram, WhatsApp, Occulus) as part of its vision to become a metaverse company,” he said. “The company hopes a new name will provide a reset on the brand’s reputation, given the extensive amount of negative press over the years. It’s doubtful that a new name on its own will completely shift the public perception, without the company also shifting its values and its operating practices. You simply cannot place a new name Band-Aid, hoping to cover up years of negative public perception.”
Whether or not the company will be successful in its objectives has yet to be determined, but investors appear to have embraced the change as shares rose following the announcement.
With a market cap of $899.51 billion, Facebook shares were up 1.95% at $323.11 on Friday morning. GuruFocus estimates the stock has gained nearly 20% year to date.
Gurus with large positions in Facebook include Baillie Gifford (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Frank Sands (Trades, Portfolio), Pioneer Investments, Chase Coleman (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Dodge & Cox, First Eagle Investment (Trades, Portfolio), Chris Davis (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Andreas Halvrosen, Diamond Hill Capital (Trades, Portfolio), Bill Nygren (Trades, Portfolio) and many others.
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