1 Recommendation for Meta Platforms (FB)| Board of Directors
2 Deal Team GelmanAndrew • From Island, NYLong • BusinessMajors: Finance|SchoolUniversity, KelleyIndianaofBusiness2024&Analytics Tyler Horberg • From Highland Park, IL • |SchoolUniversity, KelleyIndianaofBusiness2025 • Majors: Finance & Business Analytics
3 Table of Contents I. Executive Summary II. Company Overview III. Strategic Recommendation IV. Macroeconomic & Industry Analysis V. Valuation VI. Strategic Alternatives VII. Appendix 19-2817-1814-1611-138-106-74-5
4 I. Executive Summary
Overview
Meta Platforms Inc. develops products that enable people to connect with friends and family via mobile devices, pcs, and virtual reality
Meta is organized around two global business segments: Family of Apps and Reality Labs
• According to Meta’s 10-K, their mission is to bring the world closer together by bringing the metaverse to life. Their Reality Labs segment is intended to connect people anytime, anywhere and bring aspects of the real world into the metaverse.
• FIR recommends the acquisition of the vertically integrated firm Matterport Inc. (MTTR) at an offer price of $7.51 per share at an implied equity offer price of $2.110 B (All cash deal).
• The VR market is highly competitive and constantly evolving. Meta has the ability to take overwhelming control in the future of the “metaverse” with the right investments. Acquiring Matterport will allow Meta to digitize and manage physical buildings and real estate, giving other/s opportunities that are only possible with Matterport’s capture technology
• They currently operate in the Americas, Europe, Africa, Middle East, Asia-Pacific, and are headquartered in Menlo Park, CA
5 Executive Summary
• A key part of Meta’s business strategy includes acquiring companies to support growth and enhance their portfolio.
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• Meta is currently in an optimal spot to expand further into the Virtual Reality industry. This proposal will cover the strategic acquisition of Matterport (MTTR), which aims to continue the company's expansion, with the digitization and datafication of the built world.
Scope AssessmentStrategicProposalof Proposal
• Meta states that they want to invest $1 billion into metaverse applications including research and development this year alone.
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• The Meta Board of Directors has requested a presentation of strategic alternatives most beneficial to the company
• We believe a tactical buy-side acquisition or continuation upon the current path are both viable options for Meta
6 II. Company Overview
• BIGBOX VR combines platform-defining games, social communities, and competitive play to create a VR ecosystem. Meta acquired 100% of BigBox VR in 2020 to complement their recent industry related purchases.
• Meta Platforms, Inc is an American multinational technology conglomerate that engages in the development of social media applications.
Onward. Becoming pa rt of Oculus Studios will help cultivate both the Onward community with the full support of the Studios resources, and, in the future, pursue other projects. Meta acquired 100% of Downpour Interactive in 2021 for an undisclosed amount.
• DOWNPOUR INTERACTIVE is the studio behind the hit military simulator multiplayer
• OCULUS is a virtual reality headset that is designed to connect to a high-powered PC to enable advanced computations and graphics. Meta acquired 100% of Oculus in 2014 for $2B in $400 million in cash and 23.1 million shares of Facebook common stock worth $1.6B.
• Meta Inc builds technology that helps people connect, find communities, and grow businesses.
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• Meta operates through the Family of Apps (FoA) and Reality Labs (RL) segments. The FoA segment consists of Facebook, Instagram, Messenger, WhatsApp, and other services.
• Meta's recent acquisitions show their eagerness to further expand into the virtual reality industry and increase their product offerings to customers.
Company Overview
Company Description Meta Subsidiaries
• Meta continues to expand their company, as their Reality Labs segment most recently include augmented and virtual reality related consumer hardware, software, and content.
8 Company Overview Total Revenue: 117,929.0 EBITDA: 54,720.0 EBIT: 46,753.0 Net Income: 39,370.0 Capital Expenditures: (18,567) Market Capitalization: 507,589.9 Total Enterprise Value: 474,045.9 Cash and ST Investments: 47,998.0 Total Debt: 14,454.0 Total Assets: 165,987.0 June 2021- Facebook announces new ad program inside Oculus VR games July 2021- CEO Zuckerberg discusses “metaverse” in Q2 earnings call October 2021- Facebook Inc. has changed its name to Meta Platforms January 2022- Meta Platforms completes the acquisition of Kustomer, FebruaryInc. 2022- Meta Platforms announcement to pay $90 million to settle Data Privacy Class Action March 2022- Meta selects Missouri for New $800 Million Data Center Corporate Timeline:
9 III. Strategic Recommendation
• Cost Synergy: Meta will save money when it comes to developing their own VR/AI technologies as they won’t need to do more R&D into the cameras, features, etc. Matterport produces.
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Synergies
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Recommendation
• 3D worlds have hard a hard time realizing their full potential due to the costly logistics. Digitizing objects and landscapes efficiently will allow Meta to expedite this process
Matterport AI, Cortex, uses precision 3D spatial data at scale and training other AI’s to do the same will reduce research and development costs significantly.
Strategy
~Matterport Investor Presentation
• Revenue Synergy: Allow Meta to build out their VR product line further and/or upgrade their metaverse offering. Matterport will drive revenue in one or multiple aspects of Meta’s business.
Strategic
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Digital avatars will need somewhere to go in the metaverse. Using 3D special technology to create “digital twins” of real-life structures will aid in this process.
• Other Synergies: Meta will receive access to the many patents and intellectual property rights, allowing them to utilize Matterport's efficient technologies. This leads to faster turn-up time for quicker revenues. Additionally, headcount reduction.
Matterport recently acquired Enview, a geospatial analytics company that would help build Matterport’s technology for the outdoor space, which Zuckerberg has shown much interest in.
Invest in Research and Development to improve the Cortex AI-powered software engine, expand solutions portfolio, and support seamless integration for third-party systems. Also strengthen AI capabilities to integrate 3D capture freely across billions of Android mobile devices worldwide
11 Strategic Recommendation Total Revenue $111.2M Market Cap $ 1,623.1M Cash Flow (2021) $140.0M Financial Highlights
• Matterport 360 Cameras are the company's line of cameras which integrate their new software Cortex. They're affordable, pocket sized and are ready for use in all small spaces like condos, short-term rentals, apartments, and more.
• Matterport Pro 2 is a proprietary 3D camera that captures millions of spaces around the world. It is capable of capturing images of buildings of more than 500,000 square feet and has been a very popular choice for real estate companies looking to do 3D imagery.
• Grow Internationally by using a "land and expand" model and various global marketing sales efforts to capitalize on the potential for geographic expansion of digitization and datafication of the global virtual building stock.
• LEICA BLK360 is a camera developed by both Matterport and Leica that uses 3D reconstruction and powerful AI software Cortex to capture images with ultimate precision. The product works hand in hand as Matterport's digital twin.
• Expand Partner Integrations and Thirdparty Developers through integration of the open, scalable and secure enterprise platform, organizations across numerous industries can automate workflows, enhance subscriber experiences and create custom extensions for high value vertical applications.
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Matterport’s Plan
• Matterport Axis is a revolutionary motorized mount for smartphone which makes it easier to capture space in less time and more precision. It is compatible with the Matterport Capture platforms on IOS and Android
Proprietary Matterport Products
12 IV. Macroeconomic & Industry Outlook
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13 Macroeconomic Analysis- A.G
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Global economic growth in 2020 accumulated to 3.3%, with 2021 projections forecasting a growth of 6% 81% of U.S. households possess a broadband connection at their residence, which represents a 26% year-over-year growth rate
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Through the American Rescue Plan Act, the Federal Government has committed to a multi-billion-dollar bill to expand high speed internet access
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OpportunitiesOutlookTrends
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Growth in VR provides exposure to another segment for Meta, Virtual Labs
The increasing growth and demand for 5G will be a major driver for the increase in creativity and development in the metaverse Meta’s recent investments into Virtual Reality, and the corresponding experience, is evidence that Meta should be able to absorb Matterport successful Matterport is an investment to further expose Meta to the predicted growth in demand for VR
The trends of growing broadband connection worldwide indicated strong potential for both short-term and long-term growth in the Virtual Reality market.
14 Industry Analysis- A.G Virtual RealitySocial Networking And Connectivity • The global virtual reality market size is valued at approximately $22 billion and is expected to expand at a CAGR of 15% through 2030. • Expanding applications for VR include: • Vehicle Designing • Construction and Architecture • Exposure Therapy (Mental Illness) • Virtual Events • Entertainment/Gaming • Education • Industry revenue is projected to increase at an annualized rate of 17.9% to $142.1 billion over the five years to 2026. • Over the five years to 2026, percentage of services conducted online as well as internet connection speeds are expected to increase. • Companies in this industry are starting to expand into other industries, evident by Meta’s acquisition of Oculus, which could decrease companies focus on social networking and app development. Industry Outlook
15 V. Valuation
16 Discounted Cash Flow Analysis
17 Discounted Cash Flow Analysis
18 Discounted Cash Flow Analysis Sensitivity Analysis
19 Comparable Companies Analysis
20 VI. Strategic Alternatives
21 Strategic Alternatives iliiFnancaFt Strategic Fit
22 VII. Appendix
23 Appendix
24 Appendix
