'Super-Sized and Terrifying': Zuckerberg's $100B Metaverse Gamble

The CEO and founder of Altimeter Capital recommended that the tech giant reduce its metaverse investments from $10-15 billion a year to $5 billion in an open letter.

'Super-Sized and Terrifying': Zuckerberg's $100B Metaverse Gamble

In an open letter to Meta CEO Mark Zuckerberg, a shareholder described the tech giant's investment in the Metaverse as "super-sized and terrifying."

A major decline in the stock price of the company over the past 18 months has prompted the shareholder to urge the company to scale down its investment in the metaverse and its related technology arm.

A letter addressed to Zuckerberg and the board of directors was published on Oct. 24. According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. Altimeter Capital owns approximately 0.11% of Meta.

It is Gerstner's opinion that Meta's foray into the metaverse, although important, should not command as much investment as it does at present.

His company has announced an investment of $10 billion to $15 billion annually into its Metaverse project, including AR/VR technology and Horizon World, but "results may take 10 years to appear," he said.

“An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.”

In contrast, he recommended that the company focus more on artificial intelligence (AI) and less on the metaverse, as AI “has the potential to drive more economic productivity than the internet itself.”

“While most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better,” he added.

Gerstner's comments are made just ahead of Bank of America's downgrade of Meta from a "buy" to a "neutral." The bank's decision is partially due to the fact that Metaverse investments remain an "overhang" on the stock, as a result of a "lack of progress" and "new competition from Apple.”

During the past 18 months, Meta's share price has fallen 55% compared to an average of 19% for its "big-tech peers,” which he suggests “mirrors the lost confidence in the company, not just the bad mood of the market.”

The future of the metaverse is not the only thing Gerstner considers to be uncertain.

The Ethereum co-founder Vitalik Buterin noted on July 30 that although "the Metaverse will happen," corporate attempts such as those made by Facebook will fail, since "it is still too early to know what people actually want."

During the current bear market, Meta Platforms Inc has dropped 60.53% over the last year to $129.72 at the time of writing, a far greater decline than Apple, Amazon, or Google.

Meta will report its third-quarter 2022 results on October 26.

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