Investor says Meta has too many employees, and should reduce its huge investment in metaverse tech in order to get the magic back
Mark Zuckerberg, CEO of Meta, is facing opposition from investors due to its heavy spending on Metaverse and the size of its workforce.
This emerged after an important open letter from the Chairman and CEO of Altimeter Capital, Brad Gerstner, calling on Meta to stop spending so much money on the “metaverse” and reduce its workforce.
Zuckerberg last month He indicated that Facebook would make adjustments In response to the worrying global economic outlook.
At the time, Zuckerberg said in company communications with employees that Meta would freeze hiring and “further restructuring” amid an uncertain macroeconomic situation.
The idea was to reorganize teams and reduce headcount for the first time ever, signaling the end of the social networking giant’s era of growth.
This came after the announcement in June that Meta was preparing for a serious economic downturn and Lowered its hiring plans.
Zuckerberg told employees at the time that Meta had reduced its plans to hire engineers by at least 30 percent This year, he warned them to prepare for a deep economic downturn.
now in An open letter to Mark ZuckerbergBrad Gerstner of Altimeter Capital said Meta has too many employees and is moving too slowly to maintain investor confidence.
“So, with some hesitation, but with great conviction, I share an open letter that strongly encourage Meta to streamline and focus its path forward,” Gerstner wrote. “Like many other companies in a zero-rate world – Meta has drifted into surplus land – too many people, too many ideas, too little urgency. This lack of focus and fitness is masked when growth is easy but deadly when growth slows and technology changes.”
“At the same time that Meta increased spending, it lost investor confidence,” Gerstner wrote. “The conventional wisdom – the press and the investor – is that the core business hit a wall last fall.”
Meta said in July 2021 that it intends to do so Spending $10 billion annually over the next decade on developing the metaversewhich it considers the next step for the Internet, making it more inclusive.
However, Gerstner urged Zuckerberg to take the following remedial measures:
- reduce staffing expenses by at least 20 percent;
- Reducing annual capital expenditures by at least $5 billion from $30 billion to $25 billion; And the
- Restrict investment in Metaverse/Reality Labs to no more than $5 billion annually.
“At Meta, the number of employees has more than 3 times increased from 25 thousand to 85 thousand in just the last 4 years!” Gerstner complained.
“As such, we encourage the company to move aggressively and reduce at least 20 percent of employee-related expenses by January 1, 2023,” he wrote. “Why 20 percent? To put that into perspective, it’s just a matter of getting the company back to its mid-2021 levels of employee expenses — and I don’t think anyone would argue that Meta didn’t have enough employees in 2021 to handle a business that looks similar.” for how it appears today.”
The open letter to Zuckerberg reflects the level of investor frustration in Meta, which has seen its share price drop more than 61% in 2022.
Altimeter Capital owns more than 2 million shares of Meta, and the open letter is a sign that not all investors are on board with Zuckerberg’s Metaverse vision of a world of virtual and augmented reality.
Meta announced last month a high-quality VR headset, It’s called Quest Pro.
This arrived despite concern that VR or its metaverse applications (such as Horizon Worlds) were stalking consumers.
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