Major investor says Meta ‘needs to get its mojo back’, says pivot to Metaverse was too hasty

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Facebook/Meta, as well as CEO Mark Zuckerberg as a key investor in the company, could be another shoe that speaks publicly on behalf of investors, saying that the company needs to reduce its investment in the meta universe and lay off about 20% of its employees.

As you may know, Meta shares have fallen significantly this year, and Zuck’s quick turn to the meta universe last year was widely ridiculed in the media – especially recently when Zuck gave a keynote address on the metaverse in the metaversefor a very small audience.

Now the open letter has been delivered via Medium postinvestor Brad Gerstner of Altimeter Capital makes it clear that investors like him and his firm aren’t too happy with Meta’s shenanigans with the metaverse, and the return on that investment is likely to be terrifyingly remote, if at all.

He also notes that last fall’s peak and that very hasty name change to Meta look transparently desperate in retrospect, as the company was “hitting a wall” with its core products. At the time, both investors and the press were skeptical, Gerstner writes, and “that skepticism seemed to be borne out by an almost immediate and significant decline in financial results and continued underperformance through 2022.”

He also points to the fact that Meta shares are down 55% and the bad press continues, even though “this popular narrative hides the truth [that] Meta’s core business is one of the largest and most profitable in the world, with more than $45 billion in operating profit last year alone.”

But given rising interest rates, Gerstner says, the company has some tough decisions to make to address its growth dilemmas. And that could include massive layoffs—Gerstner is talking about a 20% reduction in headcount—cutting capital expenditures from $30 billion to $25 billion, and capping investments in the metaverse to $5 billion a year.

It looks like Meta has been hiring for the past year and a half, so Gerstner suggests that this high-profile cut will only return “the company to mid-2021 employee cost levels,” adding, “I don’t think anyone would argue with Meta not having enough staff in 2021 to run a business that looks anything like what it looks like today.”

And Altimeter Capital believes that the reduction of staff will take place in the near future – by January 1, 2023.

Although he sounds like he’s saying the metaverse needs to slow down, Gerstner says, “we really believe the company needs to make some of these important investments.”

“Roblox’s Dave Bashuki describes the metaverse as a natural evolution of communication—a world of multiple devices, including the phone, best viewed as a better version of text, video, and voice that will make us feel more connected,” Gerstner says. “Of course, a company that connects nearly three billion users via phone and text must invest in next-generation communications.”

The question is how much buy-in will there be for those dumb headsets and joysticks in the meantime — or could the metaverse not be all these parallel online universes, but more like a platform we dive into with specific goals, not a place for to hang out all day and night while Rome burns.

Stay tuned to see if Zuck and others take this advice to heart!

Previously: Meta Announces Metaworld Avatars Coming Soon — Plus They’d Like To Sell You A $1,500 VR Headset

Image: Screenshot via Facebook via Slate

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