Meta investors losing faith in metaverse bet - Mobile World Live

Meta investors losing faith in metaverse bet

01 NOV 2022

Meta Platforms shareholders reportedly hit out at the company’s management about its plans to increase spending on its long-term bet around the metaverse, following a Q3 which investors considered disappointing.

Financial Times reported there is a rising level of anger at CEO Mark Zuckerberg’s (pictured) unrelenting plans around the metaverse, which sees Meta Platforms continue to plough ahead despite losing the confidence of its backers.

A 4 per cent year-on-year decline in revenue and a 52 per cent drop in net income during Q3 wiped $65 billion from Meta Platforms’ market capitalisation as its share price tumbled.

Meta Platforms’ Reality Labs unit, which is tasked with building the metaverse, experienced losses of $3.7 billion in Q3, up $1.1 billion, with the nine-month loss at $9.4 billion.

The bad reaction to these figures were heightened after the company stated losses would “grow significantly” in 2023, with Meta Platforms predicting capex would reach as much as $39 billion.

Jim Tierney, chief investment officer for US growth at Meta Platforms’ shareholder AllianceBernstein, told FT if any other company had pursued such a strategy “you’d have activist investors writing letters, proposing alternative slates of directors, demanding change”.

David Older, head of equities at asset manager Carmignac added Zuckerberg was “tone-deaf” to the investment community.

“The timeline for the metaverse is very stretched. I don’t think you’re going to know if it is the right move for five or ten years.”

Commenting on the shareholder disquiet Meta Platforms told FT it valued the opinions of investors “and regularly engage with them to ensure we’re aware of their respective perspectives”.

Caveat emptor
Radio Free Mobile analyst Dr Richard Windsor took a different view, arguing Meta investors have no ground for complaint.

Windsor stated that while Zuckerberg only owns a 13 per cent economic interest in the company, he controls 54.4 per cent of the votes as the shares he has have many more votes than the shares other investors hold.

“This issue has long been known by the market and competent investors should take this risk on board when considering what investments to make,” he wrote. “This is why investors have no grounds upon which to complain as they invested in the company in full knowledge of this issue and the risk that it carries. Once again, caveat emptor.”

Back

Author

Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

Read more

Related

Tags