The founder of the renowned social media platform Facebook and the Meta board of directors on October 24 received an open letter from one of their long-term shareholders, Altimeter.
Altimeter wrote this letter to inform Meta’s founder and board members of the current decline in profit and what can be done to remedy the situation.
In the letter they sent, Altimeter explicitly praised the company for its eagle-sighted nature of investing in futuristic elements aimed at fostering a more open and connected world.
However, they are not handling the project with the needed urgency. Also, a plethora of ideas from too many people have made them lose focus.
In addition, the rebranding to Meta came at a time when investors were becoming skeptical about the company’s growth potential.
This is very evident due to the drop in Meta stock prices, losing 45% of its value in the space of 18 months.
As if that was not enough, their P/E ratio dropped from a high of 23x to 12x, trading at half the ratio 18 months ago.
All this is a bad signal that should not be ignored, but all is not lost. In the open letter, Altimeter said, “Meta needs to get its Mojo back.”
To do this, they need to show investors and the tech community that they are at the top of their game and win back the lost trust.
They also recommended a three-step plan that will not only help them regain focus but will also bring their FCF to $40 billion per annum.
The first step in their plan is for the company to reduce its headcount expenses by 20%, and the second is to reduce its yearly CAPEX from $ 30 billion to $25 billion.
Finally, they are to invest no more than $5 billion in the Metaverse and reality labs annually.
