Less metaverse and more layoffs: A Meta investor just wrote a scathing open letter to the company telling it to get its ‘mojo back’ - Fortune

Since changing Facebook’s sanction to Meta past twelvemonth and rebranding the institution to stress its absorption connected the “metaverse”—an augmented virtual reality—Zuckerberg’s idiosyncratic nett worthy dropped by implicit $70 billion, and arsenic of Monday, Meta’s stock prices are down implicit 60% year-to-date. 

Investors aren’t happy. And 1 went truthful acold arsenic to constitute an unfastened letter to the institution with suggestions connected however it could get its “mojo back.” Altimeter Capital Chair and CEO Brad Gerstner, whose concern steadfast owns 2.5 cardinal shares of Meta, said the institution has mislaid its focus. 

“Meta has drifted into the onshore of excess—too galore people, excessively galore ideas, excessively small urgency. This deficiency of absorption and fittingness is obscured erstwhile maturation is casual but deadly erstwhile maturation slows and exertion changes,” Gerstner wrote.

He went connected to accidental that the institution has mislaid the assurance of investors—and a batch of that has to bash with Zuckerberg’s obsession with the metaverse.

“The accepted wisdom—press and investor—is that the halfway concern deed a partition past fall,” Gerstner said. “As a result, the squad hastily pivoted the institution toward the metaverse—including a astonishment re-naming of the institution to Meta. Worse, this skepticism seemed to beryllium affirmed with a nearly-immediate and sizable miss successful fiscal results and continued under-performance passim 2022.”

In July of this year, Meta reported a 1% diminution successful its 2nd 4th gross compared to the aforesaid play past year—its archetypal ever diminution successful gross since going public. Despite Meta attributing the setback to pugnacious macroeconomic conditions, Gerstner said, “the diminution successful stock terms mirrors the mislaid assurance successful the company, not conscionable the atrocious temper of the market.”

So he’s proposing a three-step program to treble the company’s escaped currency travel to $40 cardinal per year.

First, trim headcount expenses by astatine slightest 20%. Gerstner said helium doesn’t instrumentality the occupation reductions “lightly” and that “they’re not conscionable numbers connected a spreadsheet.”

Meta is reportedly already mulling layoffs that could impact 15% of its workforce. 

Next, Gerstner suggests the institution should trim its yearly capex, its yearly superior expenditures utilized to acquire, upgrade, and support carnal assets, by astatine slightest $5 billion. He said those numbers reached astir $30 cardinal successful 2022. 

“Meta is investing much successful capex than Apple, Tesla, Twitter, Snap, and Uber combined!” helium wrote. He added, however, that the institution should proceed its concern successful AI (artificial intelligence) to marque each of its existing products better. 

And Gerstner’s past suggestion: bounds concern successful the metaverse to little than $5 cardinal per year. 

“People are confused by what the metaverse adjacent means,” helium said. “If the institution were investing $1–2B per twelvemonth into this project, past that disorder mightiness not adjacent beryllium a problem.”

But helium pointed retired that the institution has announced that it’s investing much much than that into its metaverse project, and has openly said it could instrumentality up to 10 to 15 years to spot results. 

“An estimated $100B+ concern successful an chartless aboriginal is super-sized and terrifying, adjacent by Silicon Valley standards,” Gerstner wrote. 

He ended by saying he  supports the company’s involvement successful the metaverse, but stressed that it tin nary longer beryllium truthful “ambitious” and “open-ended” successful its investments.

“We deliberation the recommendations outlined supra volition pb to a leaner, much productive, and much focused company—a institution that regains its assurance and momentum,” helium said.

Meta did not instantly respond to Fortune’s petition for comment.