Prof G Markets: Adidas’ Crisis Management, Google and Meta Earnings, and Market Moving Fed Speeches

Shareholder Power

Meta's dual class shareholder structure significantly impacts its corporate governance. Scott Galloway explains that this structure allows Mark Zuckerberg to maintain control over the company, despite owning a minority of shares. This setup limits the influence of other shareholders, as they can only advise rather than enforce changes. Scott highlights the inherent risk in separating economic risk from accountability:

It's Kremlin politics. It's okay. You get shares. The class A shares are the voting shares. And Mark Zuckerberg has, call it 51% plus of the voting shares, meaning that he effectively, when shit gets real, when there's anything that's important, he gets to make the decision.

--- Scott Galloway

This structure was initially adopted by media companies to protect editorial independence but has evolved to allow founders to retain control while selling shares 1 2.

   

Market Dynamics

The market's perception of Meta is heavily influenced by its advertising revenue challenges and strategic decisions. Scott Galloway notes that TikTok and new streaming platforms are siphoning advertising dollars from traditional players like Meta and Google. This shift has led to a decline in Meta's earnings, as it continues to invest heavily in the metaverse despite flat revenue growth. Scott describes the situation:

You got a guy who can't be controlled. He controls the company. He's all in on the metaverse. He's gonna, he's already rich. He doesn't care about money. So his attitude is, I'll show you.

--- Scott Galloway

Despite these challenges, Meta's core business remains profitable, leading some to view it as a potential buying opportunity, albeit with caution due to its perceived volatility 3 2.