The Rundown - Deep Dive: Is Meta Having an Identity Crisis?

Episode Date: March 28, 2026

In this deep dive, Zaid checks in on Meta and asks the big question: is the company having an identity crisis? We break down Meta’s shift away from the metaverse, its massive AI spending spree, the recent layoffs, the legal trouble piling up, and the bull and bear case for the stock moving forward.

Welcome back to the rundown for another weekend deep dive. Today, we are doing a check-in on meta. It's been a wild few weeks for the social media giant. They've killed off the metaverse. They've laid off thousands of people with potentially more cuts coming. They've lost two major cases in court, and they're still spending hundreds of billions of dollars on AI. It kind of feels like meta is going through a trillion-dollar midlife crisis in real time, and the stock has been suffering. In today's episode, we'll take a closer look at meta, why Zuck is going all in on AI,

the bull and bare case moving forward, and what the losses in court actually mean for the future of the company. We got a great one for you today. Let's dive in. You know, we usually start these deep dives by doing a origin story on how the company's got started, but we're not going to do that here for meta. Go watch the social network or something if you want a refresher on that. But I do want to talk about meta's history of evolving and pivoting.

Over the years, the company went from a website for college kids to a global social media empire. They were quick to pivot to mobile and made some key acquisitions like Instagram for a billion dollars in 2012 and WhatsApp for $19 billion in 2014. Now, it's easy to look back on those deals and say that they were a good idea, but at the time, people were absolutely clowning Mark Zuckerberg for paying a billion dollars for a little photo sharing app. Those moves turned Facebook into a social media powerhouse with over 3 billion users today. And it's these apps and users that are the engine of a massive advertising business. But here's the thing, Mark Zuckerberg has always wanted to be more than just an advertising company.

He wanted his own hardware in ecosystem like Apple and the iPhone. Because at the end of the day, Facebook, Instagram, and WhatsApp are just an app on a phone. Now, Facebook has been trying to get into the hardware space for a while. they launched their own phone in 2013, that ended up flopping. So then they made a big splash in 2014 when Facebook bought Oculus for $2 billion. Now at the time, Oculus was an up-and-coming company that made virtual reality headsets. Fast forward to October of 2021 and Zuck goes all in on virtual reality and the Metaverse. In fact, he changed the company's name from Facebook to meta and started spending billions upon billions of dollars to build out his vision. That included a

3D virtual world called Horizon Worlds, and meta also continued to develop their VR hardware. And look, to be fair, the timing kind of makes sense when you look back on it. See, back in 2021, everyone was still riding the pandemic wave. People were flush with stimulus cash. Crypto was booming. NFTs were selling for ridiculous amounts of money. And the idea of living in a virtual world didn't sound, that crazy when we were all stuck at home on Zoom calls. But then 2020 happened, the world opens back up, interest rates shoot up, the speculative bubble popped, and suddenly everyone starts questioning the Metaverse pivot and all the money that Meta is spending on it. I think there were two moments that investors started to realize that this Metaverse thing might be a disaster. First was when

Zuck posted the selfie from the Metaverse back in August of 2022. This picture is now iconic. It's that cartooning-looking avatar of Zuck in front of the Eiffel Tower? And man, did he get roasted for it? I mean, the graphics in that photo looked like a PS2 game from 2001. So that was the first big red flag. And then we started getting the earnings numbers. Those earnings showed that meta was losing billions of dollars on reality labs. In 2022 alone, reality labs lost $14 billion on the Metaverse. And then to make problems worse, this was happening during a time when the company's core product, Instagram and Facebook were under threat from TikTok and YouTube shorts. Meta's profits started to shrink and their ad revenue actually declined for the first time in the company's history. So following the

company's Q3 2020 earnings report, the market started to panic. Meta stock fell to under $90 in late 2022, which was down 80% from its 2021 highs. Well then another very notable thing happened in late 2022, Chad GPT came out and that opened the door for Zuck to pivot his entire company again. So let's talk about it. All right. So Chad GPT drops in November of 2022 and suddenly the whole tech industry loses its mind. And for good reason because Chad GPT exploded in popularity overnight, adding a hundred million users in two months and every single tech company became obsessed with AI, including our boy Zuck.

And Zuck, to his credit, moved fast to take advantage. For one, he focused the company on profitability. Meta launched the year of efficiency in 2023, cutting over 21,000 jobs. And they also started gaining traction with Instagram Reels. And look, those moves worked, at least for the stock. Meta went from under $100 a share in late 2022 to hitting all-time highs of $790 by August of 2025. That's a 8x return in less than $3.000. three years, which is pretty remarkable. And Mark Zuckerberg himself kind of went through a personal

makeover at the time. He started doing MMA and got a cool haircut and started rocking change and oversized t-shirts. I mean, it was a total 180 from the awkward robot CEO reputation that he had. And that brings us to today. Mena is finally admitting defeat on the Metaverse. Meta recently announced that they are shutting down Horizon Worlds and they're cutting back on reality lab spending, including laying off staff, to free up cash to spend on AI. This is a pretty staggering stat, but reality labs has lost over $80 billion since 2020. That's a lot of money to spend on devices and virtual worlds that barely anybody used. But AI seems to be a different story.

Meta seems to be convinced that people will actually use AI. In fact, meta already claims that their meta AI assistant, which is built into Instagram and WhatsApp, already has one billion monthly users. I kind of wonder how many of those users accidentally just clicked on the meta AI button without realizing it. But look, all jokes aside, Mena is planning to spend big on AI. I mean, they already spent $72 billion on CAPEX in 2025, mainly on AI infrastructure, and they plan to spend between $115 and $135 billion on AI CAPX this year. So they roughly doubled on what they spent in 2025.

All this money is going towards building massive AI data centers in Louisiana, Ohio, Indiana, and Texas, and packing them with GPUs. Beyond the infrastructure stuff, Zuck has also been spending a lot of money on acquisitions and talent. He hired the CEO of Scale AI to lead the new superintelligence team after Meta invested $14.3 billion into his company. It was one of the biggest aqua hires we've ever seen. He also brought over the former CEO of GitHub and he poached a bunch of engineers from OpenAI with rumors of nine figure offers. On top of that, Meta bought the AI agent startup Manus for $2 billion. And just a couple weeks ago, they acquired Maltbook, which is basically a social network for AI bots.

So Zuck has been moving fast and spending a lot of money to reposition Meta as an AI company. And look, for the most part, Wall Street has been okay with all the spending. Like I said earlier, Meta stock hit all the time highs back in August of 2025. Meta has been selling investors on the idea that all this AI spending will improve their ad targeting, boost engagement, and make the core business even more profitable. And to be fair, that seems to be the case. According to META's most recent earnings report, their revenue growth accelerated to a 24% increase of nearly $60 billion in Q4. On top of that, ad impressions grew by 18%. And the average price per ad increased 6%. So META is pointing to their investment in AI as the reason for that growth. So on the surface, it looks like META's hard pivoted

to AI seems to be paying off. But lately, the market is starting to express some concerns. Meta stock is down more than 20% in the first quarter of 2026 and hovering near 52-week lows. So why is meta stock taking a beating right now? Well, I think it's a good time to talk about their court case and the bear case moving forward. All right, so let's talk about why the market seems to be souring on meta lately because there's a lot to talk about here. I think we had to start with the lawsuits because this was a brutal week for META in court. On Tuesday, a jury in New Mexico ruled that META violated state law by failing to protect kids from predators on its platform.

The jury hit META with a $375 million penalty. And then the very next day on Wednesday, a jury in L.A. found that META and YouTube were liable in a landmark social media addiction case. A young woman argued that features in social media platforms like Infinite Scroll and algorithmic recommendations caused her anxiety and depression. The jury agreed and ordered META to pay $4.2 million and YouTube to pay $1.8 million. Now look, the dollar amount here is like pocket change for companies like META. But the precedent being set is what really matters. This is the first time a jury has ever ruled that social media platforms can cause personal injury through

their product design. And the legal playbook that they used was the same used against big tobacco. See, Back in the 90s, lawyers went after cigarette companies for knowingly making addictive products. Those lawsuits eventually led to a $206 billion settlement. And now the lawyers are making a similar argument about social media companies. They're saying that these companies designed features they knew were addictive and harmful, especially to kids. So Medica could potentially face a huge legal liability. There are thousands of similar lawsuits pending from teenagers, school districts, and state attorney generals all across. the country. So the few million dollars in penalties this week could turn into billions of dollars

down the line. And look, even if the financial penalties stay manageable, the courts could force meta to fundamentally change how Instagram and Facebook work. If meta is forced to make their apps less addicting or remove the infinite scroll, which means fewer ad dollars for meta. And that is what investors are concerned about because Instagram and Facebook are the engine of meta's entire business. And that's what investors are concerned about when it comes to meta. You know, meta stock dropped 8% following the ruling this week. But that's not the only problem that meta is dealing with. They also have an AI problem.

See, despite spending hundreds of billions of dollars on AI, meta's AI models just aren't that great compared to other AI labs like OpenAI Anthropic and Google. Meta's last model release was Lama 4, which was released a year ago, and it was really bad. In fact, it was so bad that it made Mark Zuckerberg really furious and a lot of top AI researchers left Meta after that debacle. That's why Zuck went on a big AI hiring spree last summer.

But despite poaching all the AI talent, meta still hasn't released an updated model. Now, Meta is working on a new model, codenamed avocado, but they keep delaying the release of it because it just isn't as good as Google's Gemini or Anthropics Clod. So yeah, despite Meta spending so much money on AI infrastructure and talent, they still don't have a model that can be competitive with the top players,

and that is a problem. So all that adds up to a stock that's down more than 20% this year and sitting near a 52-week low. But is it an overreaction? Well, let's talk about the bullcase for the company. Okay, so meta stock seems to be in a free fall right now. There's a lot of bad news surrounding the company, but the bullcase for meta is still pretty compelling. At the end of the day, meta is still the dominant player in social media with an incredible ad platform that prints money. The company did $201 billion in revenue in 2025, which was up 22% from 2024.

Fact that a company this size is growing more than 20% top line is pretty nuts. Advertising makes up about 97% of META's revenue, and despite META struggles to come up with a groundbreaking AI model, AI is already having a meaningful impact on their advertising business. AI has allowed META to serve more targeted ads. Ad Impressions grew 18% last quarter, and the ad is already. average price per ad went up 6%. But Zuck wants to go even further than just using AI for ad targeting. His vision is to use AI to actually create the ads themselves.

The idea here is to fully automate the advertising process, everything from the creative to the targeting to the budget optimization. So instead of a business having to design their own ads and pick an audience and manage the budget, they just tell meta AI what their product is and the AI does the rest. If they can pull this off and create a tool like this, then it could open the door for more small businesses to advertise on Meta's platform, which would mean more revenue for the company. And then that brings me to Meta's moonshot projects, like their smart glasses.

Like I mentioned earlier, Meta lost a ton of money building VR hardware and the Metaverse, but it wasn't a total waste. See, a couple years ago, Meta released the smart Rayban glasses, and they've been a pretty big hit. These smart glasses have cameras and speakers and microphones built in. They also have Meta's AI built in, and Meta said that they sold 7 million Rayband Smart Glasses in 2025, tripling the sales from the prior two years combined. You know, I own a pair of these glasses myself, and I use them pretty much every day, especially to take videos of my kids.

And then last year, Meta took it a step further when they launched their $800 meta display glasses. These glasses look pretty cool. They have a holographic display built into the lens. They also have wristbands that read. brain signals to process tabs and inputs. The tech is really cool, but at $800 a pair, I think the tech is still a bit early for true mainstream adoption. Plus, I'm not really sure if people want to screen on their face. Regardless, though, Meta finally seems to be gaining some momentum on the hardware side, something that Zuck has wanted to do for a long time. And who knows,

maybe smart glasses paired with a smart AI will be the next dominant platform. And if that's the case that all the AI infrastructure spending that Meta did could be justified. The point here, though, is that meta's core ads business is still dominant and showing no signs of slowing down. And then you add in the momentum from their glasses and if their AI model ever catches up to the competition, all of this infrastructure spending could be a massive competitive advantage.

So what's my take here? Well, there's a lot of negative sentiment when it comes to meta right now with the lawsuits and the wild AI spending and the lack of an AI strategy. So I can see why the market is nervous right now. But I gotta say, man, And meta is at such a scale with over 3 billion users across Facebook, Instagram, and WhatsApp,

that it's hard to see a competitor taking them down. TikTok had a moment for a bit, but Meta responded with Instagram Reels, which has been very successful. And beyond that, it's just hard to bet against Zuck. Despite how you might feel about the guy, he is a ruthless operator, and he's shown the ability to adapt and pivot. His latest pivot is that he's betting the entire company on AI, which I think is a better bet than burning cash on the Metaverse. The demand for AI is here.

It continues to grow. And meta has shown that AI is already starting to improve their core ads business. To me, the most compelling case for meta is that even if they never develop a leading AI model, AI is still going to help meta make more money. Now, does that justify spending all of the company's cash and more on building out AI infrastructure? I guess that's tough to say. I mean, the CAPEX numbers are nerve-wracking. But Zuck is aligning the incentives of every senior executive at Meta to focus on the upside.

Meta recently unveiled a new stock option plan where some top executives could earn up to $900 million each if Meta's market cap hits $9.5 trillion. In order for that to happen, it would require meta stock to 6x from its current value. And the only way that happens is if Meta's bet on AI actually pays off. To me, though, the biggest wildcard here is the legal stuff. You know, if the government starts regulating Instagram like a pack of Marbrose, forcing them that maybe turn off infinite scrolls, or alter their algorithm, that could have a very meaningful impact on meta's business. I'm still a little skeptical that it ever gets that far. So until the ink dries on a new legislation regulating social media companies,

we're going to keep scrolling on Instagram, and meta is going to keep using AI to keep us scrolling and showing us ads as they print money. Well, all right, guys, that's it for today's weekend, deep dive. Hope you guys enjoyed today's episode. Let us know in the comments on your thought about today's deep dive. Are you buying the meta-dib? Or do you think the lawsuits and the AI spending are going to drag the stock down even lower? Drop your thoughts in the comments on Spotify and YouTube.

And while you're at it, consider giving us a five-star rating. You know, all that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes. and we'll see you guys back here tomorrow. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-O-Jo.

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