Meta’s $100 billion investment in the metaverse is “terrifying,” according to an open source message Dated October 24, 2022 to Meta by Brad Gerstner, CEO of Altimeter Capital. CEO Criticizes Meta’s Huge Investments In metaverse. In the letter, he expressed concerns shared by Meta shareholders and urged Meta to “simplify and focus its path forward.”
Gerstner owns about 0.11% of Meta shares. By Silicon Valley standards, such a huge investment in metaverse projects with an “unknown future is huge and terrifying.”
In October last year, Mark Zuckerberg, CEO of Meta, shared a letter to stakeholders sharing his vision for the Metaverse as the next chapter of the internet. He added that social media is their DNA and that we are “a company that builds technology to connect people, and metaverses are the next frontier.”
Meta shareholders are feeling the pinch of Meta stock’s recent poor performance. The stock has reportedly fallen 55% in the past 18 months, with its price-to-earnings ratio dropping from 23 times to 12 times, less than half compared to its peers. “The drop in the stock price reflects a loss of confidence in the company,” Gerstner added, not just negative market sentiment.
To regain its magic, Meta must rebuild trust with its investors. Gerstner recommended a 3-step plan to double the Meta FCF to $40 billion annually. These included: reducing the metaverse investment to at most $5 billion annually, reducing employee expenses by 20%, and reducing the annual cap to $25 billion.
Gerstner was not entirely pessimistic. He praised Meta for being one of the most profitable companies, with profits of more than $45 billion last year. He also praised their artificial intelligence and immersive 3D capabilities that helped drive new products and growth with abundant financial resources.
Gerstner also praised timely investments in artificial intelligence (AI), a globally scarce resource that is “already driving remarkable improvements for Meta’s three billion customers and advertisers.” While Meta has shifted a smaller investment to the metaverse, Gerstner claims it has received the most attention, sparking mixed reactions from investors.
Recent Meta metaverse reviews
Mita’s got her fair share of Cash After her rebranding from Facebook and her incursion into the metaverse. In late July, Vitalik Buterin shared similar observations indicating that the metaverse’s use cases remain unclear. He added that he doesn’t think Meta’s attempt to create the metaverse will be successful in its current form.
The decline in the share price of Meta does not go unnoticed by market analysts. On the same day of the letter, Bank of America lowered Meta shares went from buying to neutral following the company’s decision to include reels on its Instagram and Facebook platforms. The Post commented that the reels do not materially increase the time you spend on platforms like Snapchat. He went on to explain that Meta’s continued focus on the metaverse was wrong, considering the amount of time it would take for their efforts to produce tangible results.
Despite the criticism that Mark Zuckerberg has over the drastic strategic shift he chose for Facebook, he is stubbornly focused on turning it into Metaverse. Zuckerberg remains conservative, tuning critics for serious interviews and presentations about his vision of virtual reality.
In his closing remarks, Gerstner indicated that he wants to get more involved and continue to share their ideas as caring contributors to a team he believes in. Meta has more reach, relevance, and growth opportunities than any platform. And that Altimeter was confident in their long-term investment in AI and that the next generation of communications will continue to drive us all forward.
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