A shareholder calls Zuckerberg's $100 billion metaverse bet "super-sized and terrifying"

By: Michael Wilson

A shareholder calls Zuckerberg's $100 billion metaverse bet "super-sized and terrifying"

October 25, 2022 6:36 AM

CEO and founder of Altimeter Capital recommended in an open letter to the tech giant that they reduce their annual investment in the Metaverse from $10-15 billion to $5 billion.


An investor wrote an open letter to Meta CEO Mark Zuckerberg, describing the company's investment in the Metaverse as "super-sized and terrifying."


In light of the steep decline in the stock price over the past 18 months, the shareholder has requested that the company reduce its spending on the Metaverse and the associated technology division.


On October 24th, an open letter was published, addressing both Mark Zuckerberg and the company's board of directors. Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital, who reportedly holds a 0.11% stake in Meta, authored the piece.


While Gerstner acknowledges the significance of Meta's expansion into the Metaverse, he argues that doing so should not require the same level of financial commitment as it does now.


He stated that the firm has officially confirmed annual investments of $10 billion to $15 billion in its Metaverse venture, which includes AR/VR technology and Horizon Universe, but that it "may take a decade to yield results." "explaining:


"Even by Silicon Valley standards, an estimated $100 billion investment in an unknowable future is enormous and terrifying."


On the other hand, he has advocated that the company shift its attention away from the Metaverse and toward AI instead, since the latter "has the potential to drive more economic productivity than the internet itself."


We believe Meta is incredibly well positioned to leverage AI to make all of its existing products better, while most companies will struggle to monetize AI.


Bank of America lowered its valuation of Meta from "buy" to "neutral" the same day that Gestner made his remarks, in part because its Metaverse investments are expected to continue acting as a "overhang" on the stock due to a "lack of progress" and "new competition from Apple."


Gerstner elaborated by saying that Meta's stock drop of 55% over the past 18 months, compared to an average drop of 19% for its "big-tech peers," "mirrors the lost confidence in the company, not simply the bad mood of the sector."


When it comes to the future of the Metaverse, Gerstner isn't alone in his pessimism.


It's far too early to know what people actually want, Ethereum co-founder Vitalik Buterin said on July 30th, so while "the Metaverse will happen," corporate attempts like Facebook's will "misfire."


Meta Platforms Inc (META) shares have dropped 60.53 percent over the past year, to $129.72 as of this writing, a decline that is significantly larger than those of Apple, Amazon, and Google during the current bear market.


On October 26th, 2022, Meta will reveal its financial results for the third quarter.