Meta must slash metaverse spending, headcount to ‘get mojo back’, shareholder says
- The chief executive of Altimeter Capital Management, which owns 2.5 million shares of Meta, said the company should double cash flow to US$40 billion a year
- Facebook changed its name last year to Meta, heralding the company’s intent to stake its future on a new computing platform where people congregate online
Meta has lost focus and its shares are underperforming peers, Brad Gerstner, chief executive of the investment firm, wrote in a blog post. The firm holds 2.5 million shares representing 0.11 per cent of outstanding stock, Bloomberg data show. Meta shares dropped 3.4 per cent to US$125.62. in New York on Monday morning. They are down 63 per cent this year, compared with a drop of about 30 per cent in the Nasdaq 100 Index.
The name change heralded the company’s intent to stake its future on a new computing platform where people will congregate and communicate in a virtual environment. But with revenue growth slowing it’s already had to cut costs and freeze hiring to cope with a fierce competition for users’ attention.
“Like many other companies in a zero rate world – Meta has drifted into the land of excess – too many people, too many ideas, too little urgency,” he wrote. “Meta needs to get its mojo back.”
To double free cash flow to US$40 billion a year the company must reduce headcount expense by at least 20 per cent, cut annual capex by at least US$5 billion, to US$25 billion, and limit investment in the metaverse and Reality Labs to no more than US$5 billion a year, Gerstner wrote.
The firm’s recommendations “will lead to a leaner, more productive, and more focused company – a company that regains its confidence and momentum,” he said. “We believe in this team.”