Are investors Losing Confidence in Meta?
- At the end of Q2 2022, Altimeter Capital owned more than 2 million shares in Meta.
- Mark Zuckerberg previously confirmed that Meta would make more investments in the metaverse and does not expect to profit from its investment in the coming years.
- Crypto experts believe the metaverse has yet to have an accurate definition, meaning early adopters have no idea what the metaverse will be.
Meta shareholders have written a scathing letter to CEO Mark Zuckerberg urging the tech giant to get focused and fit by reducing its employees by 20% and slashing $5 billion from annual capital expenditures and metaverse investments.
Investors are concerned about Meta’s strategies after failing to yield significant results. Altimeter Capital’s founder and CEO, Brad Gerstner, wrote the letter on behalf of his company, which reportedly owns a 0.1 percent stake in Meta. The open letter was directed at Meta CEO, Zuckerberg, and the board of directors.
Brad said in the early part of the letter,
I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. Like many other companies in a zero rate world — Meta has drifted into the land of excess — too many people, too many ideas, too little urgency. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.
Brad admitted that the metaverse was an important industry worth exploring. However, he noted that the budding sector should not command as much attention and investment as it does. Meta has previously outlined plans to invest heavily in metaverse projects. The company, however, does not expect immediate returns, which Brad believes is a poor strategy.
Brad believes investments in the volume of $1-2 B would not cause as much stir as Meta’s current plans. However, the investor also noted that people are still confused about what the metaverse means, so there is a need to tread carefully.
According to the Altimeter Capital founder,
The company (Meta) has announced investments of $10–15B per year into a metaverse project that largely includes AR / VR / immersive 3D / Horizon World and that it may take 10 years to yield results. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.
Brad urged the Zuckerberg-led corporation to concentrate more on artificial intelligence (AI) and less on the metaverse. The famous shareholder noted that AI can potentially increase economic productivity “more than the internet itself.” Brad also stated that Meta is well-positioned to leverage AI to grow its products even though other companies might struggle to monetize the industry.
Brad’s remarks coincide with Bank of America’s downgrading of Meta from a “buy” to a “neutral” rating. However, experts believe the company’s investments in the metaverse have a role to play alongside new competition from Apple.
The letter represents the latest indication that Meta shareholders are beginning to voice concerns with the company’s recent results. Meta stock is down more than 61% in 2022. The tech world is getting more competitive, and Meta seems to have lost its grip on the market.
As Brad said in his piece,
Meta needs to re-build confidence with investors, employees, and the tech community in order to attract, inspire, and retain the best people in the world.
The metaverse continues to be of interest to top organizations worldwide. Although Meta appears to have made the largest investment in the sector, industry experts believe the company will fail because it invested too early.