"Fear of Unknown Future Investments"... Meta Shareholders Demand 20% Staff and Half Investment Cuts

by Jeong Hyunjin

Published 25 Oct.2022 05:33(KST)

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As Meta Platforms, the parent company of Facebook, pours investments into its core area of focus, the metaverse, a hedge fund shareholder witnessing the stock price decline and poor performance urged Meta on the 24th (local time) to implement restructuring and reduce investments.

According to Bloomberg and other sources, Brad Gerstner, CEO of hedge fund Altimeter Capital, sent an open letter to Meta on the day recommending "cutting the workforce by at least 20% and reducing the metaverse investment cap from the current $10 billion per year (approximately 14.4 trillion KRW) to around $5 billion annually."

In the letter, CEO Gerstner wrote, "Meta needs to rebuild trust with investors, employees, and the tech community to attract the world's best talent and inspire them," adding, "Meta needs to become healthier and more focused." He also stated, "People are confused about what the metaverse even means," and added, "Massive investments into an unknown future are too large and frightening even by Silicon Valley standards."

CEO Gerstner further said, "Meta has too many employees and is spending too much on capital expenditures," noting, "Reducing staff by 20% would bring the workforce back to last year's levels, and with recent increases in capital costs and interest rates, spending as before is no longer feasible." As of the end of Q2, Meta's employee count was 83,553, a 32% increase compared to the same period last year.

Altimeter Capital held 2.5 million shares of Meta as of the end of June. In monetary terms, this is valued at approximately $320 million. The Wall Street Journal (WSJ) reported that Altimeter Capital is not among Meta's top 15 institutional shareholders.