Investors Metally Criticize Mark Zuckerberg as His Expensive Metaverse Pitch Meets a Disappointing Reception
Meta, the parent company of Facebook, Instagram, and WhatsApp, is facing criticism from investors and analysts as its investments in the metaverse continue to escalate.
In a recent development, Altimeter Capital Management recommended Meta to cap its yearly investments in the metaverse at $5 billion instead of the existing $10 billion. This recommendation came after Meta's stock dropped 20% and wiped $67 billion off its market price, following a fourth straight decrease in quarterly earnings.
The quarterly revenue at Meta almost halved, prompting concerns among investors. Paolo Pescatore, an expert at PP Foresight, stated that the metaverse feels like a large wager given the current economic recession. He also mentioned that the journey towards the metaverse will be "lengthy and unpleasant".
Meta's overall expenses increased by a fifth in the third quarter due to investments in the metaverse. The company's total expenditures could climb by 16% next year. Losses at Truth Labs, the system responsible for the metaverse, increased to $3.67 billion in the July-September quarter.
Meta is working on several projects related to the metaverse, including a virtual and mixed reality headset called Quest Pro priced at $1,500 and a social metaverse platform for avatars. However, people are not rushing to buy virtual reality headsets or enjoy 360-degree videos, according to Pescatore. He described the new device as an expensive toy.
Jefferies analyst Brent Thill asked Meta execs why they believe their speculative bets on the metaverse will pay off. Wall Street is losing patience with Mark Zuckerberg's large and experimental bets on Meta's metaverse project.
In contrast, other technology firms such as Microsoft and Google-parent Alphabet are reducing jobs or slowing down hiring. Despite this, Meta's headcount rose by 32 percent in the third quarter compared to the second. The company Broadcom had about 32% more employees in the third quarter period of 2022 compared to before.
Meta's investors have voiced concerns, calling the business's investments "super-sized and distressing". Experts have called Meta's investments "confusing and confounding" and its inability to reduce expenses "very troubling".
Amidst this, Meta is buying two additional locations: enhanced truth and neural interfaces. It remains to be seen how these investments will pan out for the tech giant. Altimeter Capital Management wrote an open letter to Mark Zuckerberg asking Meta to improve by cutting work and capital investment. It remains to be seen if Meta will heed this advice and adjust its metaverse strategy.
