Investors Reprimand Mark Zuckerberg for Expensive Metaverse Presentation that Fails to Impress

Wall Street is expressing growing concerns about Mark Zuckerberg's large and experimental investments in Meta's metaverse project. The tech giant's stock took a hit, dropping 20% and wiping $67 billion off its market price, following a fourth straight decrease in quarterly earnings.

The decline in earnings and the steep drop in stock price have raised questions about Meta's financial health. One investor described the business's investments as "super-sized and distressing." Altimeter Capital Management has urged Meta to reconsider its investment strategy, particularly in the metaverse, and called on the company to improve by cutting work and capital investment.

Meta's headcount rose 32 percent in the third quarter from the end of the second, indicating a significant increase in the company's workforce. This expansion, coupled with the ongoing investments in the metaverse, has caused concern among experts about the company's ability to reduce expenses.

Meta's metaverse efforts are focused on two key areas: enhanced truth and neural interfaces. However, losses at Truth Labs, the system responsible for bringing the metaverse to life, ballooned to $3.67 billion in the July-September quarter. This substantial loss has further fuelled the questions about the viability of Meta's metaverse investments.

Meta Capital Management has recommended limiting annual investments in the Metaverse to $5 billion instead of the current $10 billion. This recommendation aims to ensure more disciplined spending, likely with the goal of reducing financial risk and improving capital efficiency amid uncertainties in the Metaverse's development and profitability.

Meta's total expenses could climb by 16% next year, and revenue almost halved in the same quarter. These financial figures have led experts like Paolo Pescatore, an expert at PP Foresight, to describe the metaverse as a "one large wager given the recession."

Despite the challenges, Meta has not shied away from its metaverse ambitions. Mark Zuckerberg mentioned several efforts by Meta, including a recently introduced virtual and mixed reality headset called Quest Pro priced at $1,500 and a social metaverse platform where people can use avatars.

However, the reception to these initiatives has been mixed. Paolo Pescatore stated that the journey towards the metaverse will be "lengthy and unpleasant." He further criticised the new device, saying it still feels like an expensive plaything. The general consensus among experts and investors is that people are not rushing to buy virtual reality headsets or enjoy 360-degree videos.

Jefferies analyst Brent Thill asked Meta execs why they believe their speculative bets on the metaverse will pay off. The questions reflect the scepticism and uncertainty surrounding Meta's metaverse investments. As Meta continues to pour resources into this ambitious project, it remains to be seen whether the company's bet on the metaverse will pay off.

Investors Reprimand Mark Zuckerberg for Expensive Metaverse Presentation that Fails to Impress