Zuckerberg’s virtual insanity: Facebook billionaire was urged to slash 17,000 jobs – 20% of its workforce – ahead of earnings report as it loses nearly $650B in market valuation this year amid its controversial focus on the Metaverse
- Meta shareholder Altimeter Capital Management urged Mark Zuckerberg to cut the company’s workforce by 20 percent to save money
- It also called on expenditures to also be cut by 20 percent and for investments into the controversial Metaverse to be slashed in half
- Altimeter told Zuckerberg his company needed to make the changes in order to retain investors after the company’s market value dropped by $65 billion
- Zuckerberg is also reportedly mulling extending a hiring freeze that began in May until the end of the year
An investor of Facebook-parent Meta Platforms urged CEO Mark Zuckerberg to cut 20 percent of the company’s workforce to reduce its loses ahead of the company’s bitterly disappointing third-quarter earnings report.
Shareholder Altimeter Capital Management said in an open letter to Zuckerberg that it was concerned about Meta’s controversial pivot to virtual reality, which is bleeding money.
The warning came two days before Meta reported its disappointing third-quarter earnings loss – which has now seen the company lost nearly $650 billion in market valuation this year, with the company stock down about 24 percent on Thursay morning.
The tech-focused hedge fund, with a 0.1 percent stake in Meta, suggested a three-step plan to save money.
Altimeter said annual free cash flow can be doubled to $40billion if Zuckerberg cuts 17,000 jobs, trimmed capital expenditure by at least $5billion to $25billion a year and capped annual investment in the Metaverse to $5billion instead of the current $10billion.
‘Meta 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 CEO Brad Gerstner wrote in the letter. ‘In short, Meta needs to get fit and focused.’
Meta shareholder Altimeter Capital Management urged Mark Zuckerberg to cut the company’s workforce by 20 percent and investments in the Metaverse by 50 percent. Zuckerberg (above) has aggressively pushed billions of dollars into company’s VR projects
The push to cut 17,000 jobs comes after reports that Meta was looking to slash 12,000 people from the company. Pictured: Employees in Meta’s Silicon Valley office at Menlo Park
Meta’s stock was down more than 24 percent when the market opened on Friday, as its market valuation is down $650 billion
Meta has spent billions and hired thousands of employees around the world to build the Metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic.
But the company’s dreams have fallen short as the Reality Labs unit, which works on augmented and virtual reality, has continuously reported staggering losses. It lost $5.8billion in the first six months of the year.
Altimeter said such huge investments ‘in an unknown future is super-sized and terrifying, even by Silicon Valley standards’.
Brad Gerstner, Altimeter’s chair who encouraged aggressive investment in artificial intelligence, said the firm wanted to engage with Meta and did not have any demands.
Meta Platforms did not immediately respond to DailyMail.com’s request for comment.
The social media company had in June cut plans to hire engineers by at least 30 percent, with Zuckerberg warning employees to brace for an economic downturn.
Zuckerberg has also been reportedly mulling extending a hiring freeze that began in May until the end of the year.
It follows previous reports that Facebook would be looking to cut 12,000 jobs in October as the company shut down its offices in New York City.
Zuckerberg has repeatedly defended his decision to invest heavily in ‘Metaverse’
A report from the Wall Street Journal earlier this month said that Meta’s Metaverse is more than 300,000 users short of its year end goal despite Zuckerberg investing billions and hiring hundreds for the venture
After Wednesday’s fiscal report highlighted how much the company’s market value had dropped this year, Zuckerberg went on to defend his plan of the Metaverse.
Investors on Wednesday’s earnings call pressed Zuckerberg on his decision to pour money into the Metaverse, with one analyst asking the 38-year-old billionaire how he justified the expense.
‘I think it’s going to be fundamentally important for the future,’ Zuckerberg said.
‘I get that a lot of people might disagree with this investment. But I think it’s an important thing, and I think it would be a mistake not to invest in this for the future.’
He said it was vital ‘for the future of our business, and some of the most historic work we are doing’.
‘Look – there are a lot of things going on right now in the business and the world,’ he said.
‘So it’s hard to have a simple: we’ll do this one thing, and it’ll solve everything.
‘I appreciate the patience and I think those that are patient and invest with us will be rewarded.’
He added: ‘People are going to look back on this decades from now, and talk about some of the work we’re doing.’
Meta, a titan in the online advertising world, has been contending with a broader slowdown in ad spending as companies cut costs, as well a rising competition from TikTok and strict new privacy settings from Apple.
Revenue in the third quarter dropped to $27.71 billion, down 4 percent from a year ago but slightly beating analyst expectations, according to Refinitiv data.
‘I think it’s going to be fundamentally important for the future,’ Zuckerberg said of the Metaverse during Wednesday’s meeting with shareholders
He’s claimed that the Metaverse is the future despite several negative reviews about how its virtual world looks and operates
The company forecast fourth-quarter revenue between $30billion and $32.50billion, compared with analyst estimates of $32.20billion.
Net income fell to $4.40billion, or $1.64 per share, from $9.19billion, or $3.22 per share, a year earlier.
‘While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,’ said Zuckerberg in a statement read out at the beginning of the earnings call.
‘We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.’
Zuckerberg told investors on the call that they needed to be patient with the company’s new innovations, and allow time for it to show financial results.
A little under a year since Zuckerberg rechristened Facebook as Meta, internal documents obtained earlier this month revealed that his Metaverse virtual reality universe is struggling to meet its goals.
That’s according to documents that were seen by the Wall Street Journal. The company planned to hit 500,000 users of its virtual reality platform, Horizon Worlds, by the end of 2022. The number at the time of writing is less than 200,000, still well below a revised goal of 280,000 by the end of 2022.
The documents also reveal that the majority of those 200,000 users, don’t come back after entering the system once with many complaining most of the areas are bereft of other users.
They’ve also complained of avatars floating around eerily with no legs – an issue Meta says it’ll fix in the coming months.
Since the Spring of 2022, the number of users of Horizon Worlds has been declining.
Less than ten percent of the worlds in the Metaverse receive more than 50 visitors and the majority of these worlds receive zero visitors.
THE FACEBOOK ‘METAVERSE’: A VIRTUAL WORLD WITHIN A WORLD
In a recent interview, Mark Zuckerberg said that over the next five years, he wants people to think of Facebook not as a social media company, but a ‘metaverse’ company.
That is one that is akin to a virtual environment where people can work and play for most of their 24 hours without leaving their home.
‘And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company,’ Zuckerberg said in the interview with The Verge.
‘And obviously, all of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators.
‘But this is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.’
So what exactly is the metaverse?
As Zuckerberg describes it, it’s a ‘vision’ that spans the entire tech industry, calling it the successor to the mobile internet.
‘But you can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it,’ he continued.
‘And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage, like dancing, for example, or different types of fitness.’
The Facebook CEO says his vision – which he has been working on for several months – would not only reach into virtual reality, but augmented reality, computers, mobile devices and game consoles as well.
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