Shareholders Call Zuckerberg’s $100B Meta Bet “Massive And Scary”
The CEO and founder of Altimeter Capital advised the IT giant to reduce its annual investments in the metaverse from $10–15 billion to $5 billion in an open letter.
The internet giant’s investment in the Metaverse has been dubbed “super-sized and scary” in an open letter from shareholders to Meta CEO Mark Zuckerberg.
Amidst a sharp decline in the company’s stock price over the last 18 months, the shareholder has pushed the business to reduce its investment in the metaverse and its associated technology division.
The open letter, which was addressed to Zuckerberg and the board of directors, was released on October 24. Brad Gerstner, the CEO and founder of the technology investment company Altimeter Capital, wrote it. According to Hedge Follow, Altimeter Capital holds around 0.11% of Meta.
Gerstner said that although Meta’s entry into the metaverse is significant, the corporation shouldn’t be investing as much in it today.
The business has said that it would spend $10 to $15 billion annually on its Metaverse project, which includes AR/VR technology and Horizon World, but it “may take 10 years to yield results,” the speaker noted, adding:
“An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.”
The corporation should instead concentrate more on artificial intelligence (AI) and less on the metaverse, according to him, since it “has the potential to drive greater economic productivity than the internet itself.”
“While most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better,” he added.
Gerstner’s remarks coincide with Bank of America’s downgrading of Meta from a “buy” to a “buy” rating, in part because of its investments in the Metaverse, which are anticipated to continue to have a “overhang” on the company owing to the “lack of progress” and “new competition from Apple.”
The stock of Meta has dropped 55% over the last 18 months, compared to an average decline of 19% for its “big-tech counterparts,” according to Gerstner, who believes that this “mirrors the lost confidence in the company, not just the bad mood of the market.”
Gerstner is not the only individual who believes that the metaverse’s future is somewhat “uncertain.”
On July 30, Ethereum co-founder Vitalik Buterin said that while “the Metaverse will happen,” corporate attempts such as those by Facebook will “misfire” because “it’s far too early to know what people actually want.”
At the time of writing, Meta Platforms Inc.’s share price was down 60.53% over the previous year to $129.72, a far bigger decline in the current bear market than companies like Apple, Amazon, and Google.
On October 26, Meta is scheduled to release its third quarter 2022 earnings.
