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Altimeter Capital Management, a stakeholder in Facebook-parent Meta Platforms, stated in an open letter to CEO Mark Zuckerberg on Monday that the company needed to simplify by slashing employment and capital spending.
According to the technology-focused hedge fund with a 0.1% investment, the firm has lost investor trust as it increased expenditure and shifted to the metaverse, and it has proposed a three-step approach.
Altimeter estimates that yearly free cash flow may be doubled to $40 billion if staff is reduced by at least 20%, capital expenditure is reduced by at least $5 billion to $25 billion per year, and annual investment in the metaverse is limited to $5 billion rather than the current $10 billion.
Meta has invested billions of dollars and employed thousands of people all around the world to create the metaverse, which is a shared digital environment that employs augmented or virtual reality technologies to make it feel more lifelike.
However, the company’s hopes have been dashed as the Reality Labs subsidiary, which focuses on augmented and virtual reality, has consistently recorded enormous losses. In the first six months of the year, it lost $5.8 billion.
According to Altimeter, such large investments “in an unknown future are super-sized and frightening, even by Silicon Valley standards.”
Meta Platforms, which is scheduled to announce third-quarter earnings after the markets close on Wednesday, did not immediately reply to a Reuters request for comment.
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