In a strongly worded letter to CEO Mark Zuckerberg, Meta shareholders urged the mega company to “stay fit and focused” by laying off 20 percent of employees and reducing $5 billion in annual capital expenditures and reverse investments.
Drafted by Brad Gerstner, founder and president of Altimeter Capital the message On behalf of his company – which owns a 0.1 percent share In Meta – And don’t hold back from criticizing Zuck’s Empire in the aftermath of an Empire dismal performance this year.
“In the past 18 months, Meta stock has fallen 55 percent,” Gerstner wrote. “Price-to-earnings ratio [price-to-earnings ratio] It dropped from 23x to 12x and is now trading at less than half the average P/E of your peers. This drop in the share price reflects a loss of confidence in the company, and not just the bad mood of the market.”
Much of what Altimeter accuses of being meta-meta is exaggerated to ordinary corporate bloat. “Like many other companies in the zero-rate world — Meta has drifted into surplus land — so many people, so many ideas, so little urgency,” Altimeter said.
Altimeter said that under its three-part plan, Meta could double its free cash flow to $40 billion annually and bring it in line with revenue generated by other big tech companies, such as Google, Microsoft and Apple.
In the past four years, Altimeter said, the number of employees at Meta has more than tripled, from 25,000 to 85,000. Laying off 20 percent of the staff will bring Meta back to staffing levels in mid-2021, a move Altimeter said was unlikely. That impacts revenue and can help Meta “operate better and more efficiently without the layers and inertia that come with such an extreme rate of employee expansion.”
On capex, Altimeter makes a startling claim: Excluding metaverse investments, Meta still spends more on capex than Apple, Tesla, Twitter, Snap, and Uber combined, with plenty of growth seen in the past three years (no numbers) given it). Altimeter said such annual spending should be cut by $5 billion and kept that way until revenue rebounds.
Again, this does not include metaverse investments, which seems to be the biggest sticking point in the altimeter. Hedge fund said Meta 10 billion dollars investment At Reality Labs’ push-back group last year, along with Zuckerberg’s claims that It could take up to a decade For the metaverse to be profitable, it is absurd.
Oversized and terrifying, even by Silicon Valley standards
“An estimated investment of over $100 billion in an unknown future is large and terrifying, even by Silicon Valley standards,” Gerstner said in the letter, urging Meta to cut its metaverse spending in half to no more than $5 billion annually. .
Altimeter also urged Meta to adopt “more distinct goals and success metrics” for metaverses, which it said would likely go a long way toward satisfying investors.
The Meta metaverse is supposed to be a galaxy of interconnected 3D virtual reality worlds, accessible via VR headsets, where people are expected to interact, play, work, look at ads, and spend. So far, it’s been Confusing let downAnd a little more than marketing. It comes that, among other factors, Apple is blocking targeted ads on Facebook with tracking protection in iOS, and is pushing ahead with its own Apple ad network, while stalking Facebook’s TikTok.
Meta told us it “does not provide comment on the message,” which makes it unclear if Altimeter’s suggestions will be implemented. For its part, Altimeter said it still believes in the Meta team, and believes the social network — used by 1.6 billion people daily and banks with $40 billion in profits annually — should lean more toward AI, which Altimeter believes is “the future.”
On the other hand, his three-point plan is only a suggestion, Gerstner wrote. “We simply wanted to get more involved and continue to share our thoughts as an interested contributor.”
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