Meta ‘lost the confidence of investors’: An Investor calls out on Zuckerberg’s plan for Metaverse October 25, 2022
Meta ‘lost the confidence of investors’: An Investor calls out on Zuckerberg’s plan for Metaverse <br><br>
Meta ‘lost the confidence of investors’: An Investor calls out on Zuckerberg’s plan for Metaverse
In an open letter titled “Time to Get Fit” shared on an American publishing platform, Medium, by the CEO of Altimeter Capital Chair, Brad Gerstner calls out on Meta’s CEO Mark Zuckerberg, saying that as “Meta ramped up spend, you lost the confidence of investors.”
Brad Gerstner listed a three-step plan that will double FCF to $40 B per year and focus on the company’s teams and investments. He encourages the company to get its lost “mojo back” and recommended reducing headcount by 20% and the company’s high expenses incurring into “metaverse” technology. “The facts are startling. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market.”
Brad Gerstner holds 2.46 million shares in Meta, in the letter he summons Meta of being carried away “into the land of excess” with “too many people, too many ideas, too little urgency.” He mentioned the cause for Meta’s current scenario; as the company is too focused on building metaverse technology, its losing focus on its core business activities that generates profit.
He wrote in the letter that “Meta needs to rebuild confidence with investors, employees, and the tech community in order to attract, inspire and retain the best people in the world. In short, Meta needs to get fit and focused.”
Meta has also dramatically increased its capital expenses in the last three years. Meta has gone from $15B in annual CAPEX in 2018, 2019, and 2020 to $30B in annual CAPEX in 2022, after excluding metaverse investment. The letter says, “To put that in perspective, excluding your large metaverse investment, Meta is investing more in CAPEX than Apple, Tesla, Twitter, Snap, and Uber combined!”
At the start of October, Meta presented their recent updates to Reality Labs, which many found disappointing. Someone called the presentation “desperate.”
The investors are now reserved towards to company’s latest developments and now Meta stock is down over 61% in 2022. The last years have remained difficult for Meta, since the company changed its name from Facebook to Meta, its metaverse business has reported more than $15 billion in losses.
Gerstner informed the Meta board of directors and the CEO in the letter that Altimeter Capital “We don’t have any demands. We simply wanted to further engage and continue sharing our thoughts as interested shareholders. We believe in this team. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward.”
The letter has not received any response from anywhere in the Meta.
Gerstner said, “We think the recommendations outlined above will lead to a leaner, more productive, and more focused company — a company that regains its confidence and momentum.”