Does Sheryl Sandberg’s Exit from Meta Signal Trouble?

In an unexpected post on Instagram, Sheryl Sandberg, the Chief Operating Officer of Meta Platforms (NASDAQ: FB), said she will be stepping down from her role in the fall to focus “more on my foundation Lean In and Option B and philanthropic work, which is more important to me than ever given how critical this moment is for women.”

Nonetheless, she will continue to serve on Meta’s board as she strongly believes in the company’s vision. Sandberg will be succeeded by Javier Olivan, who is currently Meta’s Chief Growth Officer.

The news comes a few days following billionaire investor Peter Thiel’s exit from Meta’s Board after 17 long years. The company will also change its stock ticker symbol to “META” on June 9. FB shares fell 2.6% to close at $188.64 on June 1, on news of Sandberg’s exit.

Sheryl Sandberg’s Contributions and Controversies

Before joining Facebook (as it was called earlier), Sandberg worked as the Vice President of Global Online Sales and Operations Executive at Alphabet (GOOGL).

Her contribution to FB spans over 14 years of hard work and dedication and is one of the major benefactors in making a $153 million revenue-generating company in 2007 into a $115 billion revenue-making behemoth in 2021.

Facebook thrives on advertising revenues, and Sandberg’s concentrated efforts have helped attract billions of dollars in revenue. “Sitting by Mark’s side for these 14 years has been the honor and privilege of a lifetime,” Sandberg quoted in her post.

Sandberg has decided to let the next generation of leaders take over the stewardship.

Sandberg also handled the public relations for FB and has been at the receiving end of the slew of issues related to the company’s scrutiny over toxic content, data privacy, spreading misinformation, a privacy scandal involving Cambridge Analytica, antitrust violations, as well as the high-profile issue of removing President Donald Trump from the site in 2021.

Furthermore, since last year, Co-founder and CEO, Mark Zuckerberg has been trying to foray into the metaverse world, which narrows the gap between reality and virtual worlds with the help of artificial intelligence (AI) and augmented reality (AR) tools.

Being an advertising specialist, Sandberg started stepping back from Meta’s transformation towards the metaverse and has played little role in its change. Meanwhile, Zuckerberg has taken up most of Sandberg’s responsibilities and passed on a few to other executives.

Sources state that Sandberg’s initial ignorance of the company’s crisis and delay in responding has bothered Zuckerberg, who then started taking matters into his own hands. Sandberg did not even agree with the latter’s ways on several fronts, including content moderation.

Sources even claim that Sandberg had thought of leaving Meta on earlier occasions but remained on board as she did not want to abandon a sinking ship. However, both Facebook patrons have displayed unparalleled support towards each other through the company’s good and bad times.

Calling Sandberg’s departure “the end of an era,” Zuckerberg stated, “Sheryl architected our ads business, hired great people, forged our management culture, and taught me how to run a company… She created opportunities for millions of people around the world, and she deserves the credit for so much of what Meta is today.”

Meta’s stock price has lost 44.3% year to date, with the broader tech sell-off, diminishing revenue from advertising due to Apple’s (AAPL) iOS policy changes and the Ukraine war.

Wall Street’s Take

Recently, Morgan Stanley analyst Brian Nowak lowered the price target on FB stock to $300 (59% upside potential) from $330, while maintaining a Buy rating. Based on the uncertain macroeconomic and micro factors, Nowak’s revised Meta’s online advertising and e-commerce estimates are lower.

Moreover, Morgan Stanley’s macro team’s research shows that the probability of a recession has increased from 5% to 35% from the start of the year. His model now projects approximately 13% and 16% year-over-year online ad growth, while e-commerce growth is projected by 8% and 10% in 2022 and 2023.

Analysts on the Street have a cautiously optimistic view on FB stock, with a Moderate Buy consensus rating based on 26 Buys, eight Holds, and one Sell. At the time of writing, the average Meta Platforms price target of $278 implies 47.4% upside potential to current levels.

Ending Thoughts

A lot is happening behind closed doors at Meta Platforms, of which some are known and a few unknown. While the COO leaving the company signals trouble in paradise, the CEO’s determination to leave a mark in the metaverse spells another story. Even investors are giving mixed signals, with Hedge funds increasing their exposure to FB stock by 8.8 million shares in the last quarter, while retail investors are decreasing their stake by 0.1% in the last 30 days.

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