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Home Digital Life

Did Zuckerberg’s metaverse fail already? Here’s why investors are losing faith

  • BY Dzamira Dzafri
  • 28 October 2022
  • 10:23 am
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A shareholder has called investing in Mark Zuckerberg’s metaverse “super-sized and terrifying”. In an open letter, he urged the Meta CEO to scale down its investment in the metaverse after the company posted its fourth straight decline in quarterly profit.

“The conventional wisdom—press and investor—is that the core business hit a wall last fall. As a result, the team hastily pivoted the company toward the metaverse—including a surprise re-naming of the company to Meta. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022,” said investor Brad Gerstner.

He wrote that in the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). He shares that the decline “mirrors the lost confidence in the company”.

Gerstner recommends Meta to “focus the company’s teams and investments”. This includes reducing headcount expense by at least 20%, reducing annual capex by at least USD 5 billion, as well as limiting investments in metaverse and Reality Labs to no more than USD 5 billion per year.

“Instead, the company has announced investments of USD 10–15 billion per year into a metaverse project that largely includes AR / VR / immersive 3D / Horizon World and that it may take 10 years to yield results. An estimated USD 100 billion+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards,” said Gerstner.

Analysts have also said that the metaverse “feels like one big gamble”. It’s also currently not even that accessible for the majority of people—as the virtual reality headsets required to get the best experience in Meta’s virtual world—the Meta Quest 2—can cost RM1,887.95.

However, when Zuckerberg was asked why his company is focused on experimental bets, he said that “it would be a mistake for us to not focus on any of these areas that will be fundamentally important to our future”. He has not yet commented on Gerstner’s open letter.

Meta’s share price is in danger of falling to its lowest level in six years. The stock has plunged by 61.6% since the year began.

I’ve previously created a feature about the misconceptions of the metaverse, and how it’s really nothing new. And although it looks like the Meta metaverse isn’t doing too great, the metaverse as a concept and on the whole won’t be going away. You can watch what I mean in the video below.

[ SOURCE, IMAGE SOURCE ]

Tags: FacebookMark ZuckerbergMetametaversemetaverse facebook
Dzamira Dzafri

Dzamira Dzafri

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