A major Meta Platforms Inc. shareholder has some scathing advice for the embattled company: Slash payroll costs by 20% and limit annual spending to $5 billion on its quest to pursue the metaverse.
needs to re-build confidence with investors, employees and the tech community in order to attract, inspire and retain the best people in the world,” Altimeter Capital Chief Executive Brad Gerstner wrote in an open letter to the company and its CEO, Mark Zuckerberg on Monday. “In short, Meta needs to get fit and focused.”
“The facts are startling,” added Gerstner, whose firm owns 2 million Meta shares. “In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market.”
The letter, posted on Medium, is the latest sign that Meta investors are growing restless and exasperated with the company’s recent performance. Meta’s stock has tumbled 61% so far this year, and investors are bracing for another hit when the company reports fiscal third-quarter results on Wednesday.
Gerstner’s blistering assessment comes two weeks after Meta announced a new high-end $1,500 VR headset, Quest Pro, amid few signs that some of Meta’s metaverse apps, such as Horizon Worlds, are catching on with the public.
“An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards,” Gerstner said.
“We would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023,” he added. “Why 20%? To put that in perspective, it merely takes the company back to mid-2021 levels of employee expense.”
Meta officials declined comment on the letter.
Meta shares were up 2% in early-afternoon trading Monday.