Brad Gerstner, CEO of Altimeter, one of Meta’s key investors, wrote to Mark Zuckerberg about Meta. Brad wrote an open letter about Meta’s current state, suggesting a reduction in investment in Metaverse reality lab projects
Meta Investors Are Annoyed By Metaverse!
Brad Gerstner, Altimeter CEO and Capital President, wrote a long open letter published Oct. The open letter listed several shortcomings the company had made in previous years. He also proposed a plan for the company to regain its strength. In the open letter, ‘Meta needs to rebuild trust with investors, employees and the tech community to attract, inspire and retain the best people in the world . In short, Meta needs to adapt and focus’.
This open letter shows that Meta investors and shareholders are beginning to voice their reservations and concerns about the company’s recent performance and future if the change of direction is not implemented early. In addition, Meta shares fell more than 61 percent in 2022. This is not good news for the company’s investors and shareholders.
Brad proposed a three-phase plan to help the tech giant rebound and strengthen its market position. He claimed that this three-phase plan would double the revenue. Brad argues revenue will increase to $40 billion a year, helping the company focus on its teams and investment. When the plan stages are examined, the first of the three stages is to reduce personnel expenses by 20 percent. This means a direct 20 percent reduction in employees and expenses. The second is to reduce the annual CAPEX from $30 billion to $25 billion. However, the company must reduce at least $5 billion. Third, Metaverse attempts should be restricted. Reality Labs investments should be limited to no more than $5 billion per year.
Letter Recommends Hard Decisions!
According to the open letter, Meta has increased the number of employees from 25000 to 850000. It has increased its employee base by more than 300 percent in four years. Brad argues that the company will work better and more efficiently with fewer employees. It therefore invites Meta and its board to act aggressively. It also advocates cutting at least 20 percent of employee-related expenses by January 2023.
To address the problem Meta is facing, Brad recommends that the company reduce its Capital Expenditure (CAPEX) by at least $5 billion during this period of growth and transition. He also argues that this discipline should be maintained until income accelerates again. Meta is noted to invest more in Capex than the combination of Apple, Tesla, Twitter , Snap and Uber. This is a huge investment for Meta. In addition, this situation does not benefit the financial health of the company.
The Metaverse strategy in the last item is very important. Metaverse proposes to reduce investment in reality lab projects. Meta has recently made an investment that includes AR, VR, immersive 3D and Horizon Worlds . It is also a Metaverse project that may take 10 years to produce results, according to Meta. An annual investment of $10 to $15 billion has been interpreted as an investment of over $100 billion into an unknown future.