Meta investor urges Zuckerberg to slash staff and cut costs

An investment firm said in an open letter to Mark Zuckerberg on Monday that Meta -5.59% decrease; red down pointing triangle Platforms Inc. should slash staff and pare back its metaverse ambitions, in a sign of rising discontent among shareholders.

Altimeter Capital Chief Executive Brad Gerstner wrote that Mr. Zuckerberg needs to take drastic steps to streamline Meta’s operations and address a steep drop in the share price.

“Like many other companies in a zero-rate world—Meta has drifted into the land of excess—too many people, too many ideas, too little urgency,” Mr. Gerstner said in the letter. “Meta needs to get its mojo back.”

Meta shares are down more than 50% in the past 18 months, slicing more than $600 billion from the company’s market value. Meta reports earnings after the bell on Wednesday.

Meta declined to comment on the letter. Altimeter didn’t immediately respond to a request for comment.

Altimeter, which has almost $18 billion under management, owned about 2.5 million Meta shares at the end of the second quarter, according to FactSet. That holding, valued at roughly $320 million, doesn’t rank in the top 15 of Meta’s institutional shareholders. Gerstner said that the firm, which is based in Boston and has offices in Meta’s home of Menlo Park, Calif., was a longtime shareholder of the company but that he now believes it needs to “get fit and focused.”

Gerstner wrote that Meta should cut head count expenses by 20%, echoing the views of others who have recently argued that tech companies have become bloated with too many employees after years of expansion.

“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” he said.

Meta reported having 83,553 employees at the end of the second quarter, up 32% from a year earlier.

Like many tech companies, Meta has been in cost-cutting mode for months as it confronts slowing growth and increased competition.

Gerstner also recommended that the company dial back its investment in the metaverse, which Zuckerberg has touted as the company’s future and said would require more than $10 billion in annual investment. Gerstner recommended the company limit that investment to $5 billion annually, calling Meta’s commitment “super-sized and terrifying, even by Silicon Valley standards.”

Despite the significant investment thus far, the company is behind on its goals for the metaverse, which is an immersive online experience where users can work, shop and play. Its flagship metaverse offering for consumers, called Horizon Worlds, is reaching fewer than 200,000 monthly active users, The Wall Street Journal reported earlier this month.

“People are confused by what the metaverse even means,” Gerstner wrote.

Gerstner closed by that saying he wasn’t making demands and that he continues to believe in Meta’s future. Wall Street Journal