Another shoe may be dropping for Facebook/Meta, and for CEO Mark Zuckerberg, as a key investor in the company speaks out publicly, on behalf of investors, saying that the company needs to dial back its investment in the metaverse and lay off about 20% of its employees.

As you may be aware, Meta's stock is way down this year, and Zuck's quick pivot to the metaverse last year has been widely mocked in the media — most notably, recently, when Zuck gave a keynote address about the metaverse in the metaverse, to an audience of very few.

Now, in an open letter delivered via Medium post, investor Brad Gerstner of Altimeter Capital is letting it be known that investors like him and his firm are none too pleased with Meta's metaverse shenanigans, and the return on this investment is probably frighteningly far off, if it comes at all.

Also, he points out that the pivot last fall and that very hasty company name-change to Meta looks transparently desperate in retrospect, as the company was "hitting a wall" with its core products. Both investors and press were skeptical at the time, Gerstner writes, and "this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022."

He also points to the fact that Meta's stock is down 55%, and the bad press continues, even if "this popular narrative obscures the truth [that] Meta’s core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone."

But given rising interest rates, Gerstner says, the company needs to make some hard choices to address its growth dilemmas. And those might include mass layoffs — Gerstner is talking a 20% reduction in headcount — a reduction in capital expenditures from $30B to $25B, and limiting of investment in the metaverse to $5B per year.

It seems that Meta has been on a hiring spree in the last year and a half, so Gerstner suggests that this large-sounding reduction will only take "the company back to mid-2021 levels of employee expense," and he adds, "I don’t think anybody would argue that Meta wasn’t sufficiently staffed in 2021 to tackle a business that looks similar to how it looks today."

And Altimeter Capital is suggesting that this slashing of staff happen soon — by January 1, 2023.

Despite sounding like he saying the brakes should be pumped on the metaverse, Gerstner says,"we truly believe that the company should be making some of these important investments."

"Dave Baszucki of Roblox describes the metaverse as the natural evolution of communication — a multi-device world, including the phone, that is best thought of as a better version of text, video, and voice that will make us feel more connected," Gerstner says. "Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication."

The question is really how much buy-in there's going to be for those dorky headsets and joystick things in the interim — or whether the metaverse might not be this entire online parallel universe, but more like a platform we dip in to for specific purposes, not a place to hang out all day and night, while Rome burns.

Stay tuned to see if Zuck et al take any of this advice to heart!

Previously: Meta Announces That Metaverse Avatars Will Soon Gain Legs — Also, They'd Like to Sell You a $1,500 VR Headset

Image: Screenshot via Facebook via Slate