Last week, Facebook (NASDAQ: FB) announced that it was reorganizing and changing the name of its company.
On the surface, this is a puzzling move. Why would the social media giant embrace a new, unknown name instead of Facebook, a brand with remarkable presence and awareness?
Some companies have done just the opposite.
For example, Target (NASDAQ: TGT) ditched Dayton Hudson at the turn of the millennium. Blackberry (NYSE: BBRY) also dropped the Research in Motion name in 2013.
Unlike the two, Facebook has decided to rebrand with a new unknown name after a rough couple of years for CEO Mark Zuckerberg and the company. The company has been accused of spreading misinformation on its site and was at the uncomfortable center of the Cambridge Analytica scandal in early 2018.
Zuckerberg and his team have also been heavily criticized over the company’s privacy issues and data practices, perpetuating hate speech, body shaming, and other harmful content.
Now, it seems like he has found a somehow clever way to put all these problems behind. Change to a new name.
Facebook has announced it’s changing its name to Meta Platforms, Inc. to rebrand and focus its attention on building the “metaverse,” a virtual world in which users live, work, and play online.
The social media giant confirmed the name change in a blog post on Oct. 28, saying that its shares will trade under a new stock ticker, “MVRS,” starting Dec. 1.
According to co-founder and Chief Executive Mark Zuckerberg, the company decided to change to “Meta” because its current “Facebook” name does not cover everything it hopes to achieve in the future.
As per Zuckerberg, the company will be referred to as “metaverse-first, not Facebook-first.”
“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 at the Facebook Connect virtual reality conference.
Why Facebook is rebranding
Facebook started as a company that built a social media website, but over time, it has become a lot more than that. The Menlo Park, California, company has acquired or created a couple of other hugely popular internet products, including Instagram, WhatsApp, and Oculus.
More recently, the company has begun putting resources into a project known as the “metaverse.”
During Facebook’s Connect conference, Zuckerberg described the metaverse as a three-dimensional virtual world created by virtual reality (VR) and augmented reality (AR) products and services, adding that the project will be “the successor to the mobile internet.”
Zuckerberg believes that Facebook projects have become too sprawling and diverse to be effectively managed by a single operating company. Different projects require different company cultures, different types of resources, and different types of leaders.
Therefore, he is creating Meta as a holding company responsible for overseeing these different projects while allowing each to be a little bit independent.
How will the change affect the company?
The social network said the names of its various apps will remain unchanged, meaning the Facebook app will still be known as Facebook. The name change is only going to affect the company’s corporate parent.
Several notable companies have made a similar change in recent years.
For example, Google changed its name to Alphabet (NASDAQ: GOOG) in 2015 to help the public differentiate its Google search engine and products from its Waymo autonomous vehicle venture and other businesses.
A year later, Snapchat renamed itself Snap in 2016 as it aimed to be known as a camera company.
Will the change have any effect on the stock and the FAANGs?
As Facebook re-christens itself Meta, its current FB ticker symbol which the company uses on the Nasdaq is also expected to change to MVRS beginning Dec. 1.
While the symbol change may confuse some stock traders, for the time being, MVRS may help them out in the long run as it will have less common with other ticker symbols.
But the name change leaves a question market over the fate of the acronym FAANG, which is widely used by traders to refer to some of the biggest technology stocks on Wall Street.
What acronym are these stocks now going to be given? Is it going to be MAANG – where the “F” is replaced with “M.” Some Twitter users have suggested rearranging the letters to MANGA, while others say Netflix should be axed, Microsoft added, and the letter “A” used for Alphabet to form MAMATA.
By embracing the name Meta, Facebook is becoming a pure house of brands. The parent brand, Meta, will own several different brands, including Facebook, Instagram, WhatsApp, and Oculus.
Meta apparently will be the corporate parent as opposed to being a consumer-facing brand. This is the same structure that many successful brand-oriented companies use. Alphabet owns a host of brands including Google, YouTube, Fitbit, and Nest.
Microsoft (NASDAQ: MSFT) businesses include LinkedIn, aQuantive, ZeniMax, Skype, Mojang, and GitHub.
Facebook’s new strategy makes great sense. One notable advantage is that it makes the company more flexible since it can now easily acquire new businesses and spin-off businesses.
With the restructuring, Zuckerberg and his team can add businesses to address growth opportunities and sell or spin-off businesses with less potential.
The strategy change is also likely to make Facebook a stronger brand since now people won’t be confusing the platform with its parent company. Facebook can be Facebook, one of the world’s best platforms for connecting with friends. This will make the Facebook brand better defined and tighter.
However, as Emily Birnbaum of Politico points out in this post, changing its name to Meta is highly unlikely to take away congressional and public anger over complaints that Facebook is doing more harm than good to our society.