Meta investor urges company to slash headcount, slow metaverse spending
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Meta Platforms investor Altimeter Capital sent an open letter calling on CEO Mark Zuckerberg and the tech giant's board of directors to cut back on the company's headcount and spending on its metaverse ambitions.
"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. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes," Altimeter CEO Brad Gerstner wrote Monday. "At the same time that Meta ramped up spend, you lost the confidence of investors."
The firm claims that Facebook hit a wall in its core business last fall, prompting it to "hastily" change its name and pivot its focus to the metaverse, an immersive online space where users can interact with each other as avatars in a computer-generated environment.
The letter notes that, in the past 18 months, Meta's stock has tumbled 55%, compared to the average 19% of its big-tech peers. As of the time of publication, Meta is down approximately 63% year to date.
Meta Platforms Inc.
In order to "get its mojo back," Gerstner says the company needs to reduce headcount expenses by 20%, cut its $30 billion in annual capital expenditure spending for 2022 by at least $5 billion and limit its investment in the metaverse and its Reality Labs division to no more than $5 billion per year.
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As of June 30, Meta reported a global workforce of 83,553 employees, up 32% year over year. Altimeter believes that cutting at least 20% of employee expenses by Jan. 1 would bring the company back to its employee expense levels of mid-2021.
"I don’t think anybody would argue that Meta wasn’t sufficiently staffed in 2021 to tackle a business that looks similar to how it looks today," Gerstner said.
In May, Meta said it would halt or slow down hiring for most mid-to-senior level positions following its revenue growth slowdown in the first quarter of 2022. Since then, the company has also reduced its office space as many of its employees continue to work remotely.