Mark Zuckerberg's personal wealth fell by US$76bn and he dropped to 23rd on Bloomberg’s list of the world’s richest people after Meta Platforms Inc (NASDAQ:FB) shares took another beating yesterday following third quarter earnings.
Disappointment with the Facebook, What's App and Instagram owner's recent trading was the cause (read here)
Critics say the Meta CEO, chairman and co-founder only has himself to blame and that the obsession with the metaverse (a virtual online world peopled by avatars) represents a grand folly on an industrial scale.
Losses at Reality Labs, Meta’s division dealing with all things metaverse are huge and escalating rapidly.
The division shed US$10.2bn last year and Dave Wehner, Meta's CFO, told shareholders yesterday that losses would grow significantly in 2023.
All this was fine when Facebook was growing like topsy in the run-up to the COVID-19 pandemic, but with advertising spending shrinking investors are questioning how much longer Meta can afford to indulge its boss’s unblinking Reality Labs support.
Again, yesterday, Zuckerberg reiterated that spending on the metaverse was fundamental not only to the company’s future but also to the world’s.
“There’s a difference between something being experimental and not knowing how good it’s going to end up being,” he told reporters.
It's an attitude that has infuriated some shareholders to the point of airing their grievances publicly
Ahead of the numbers, Brad Gerstner at Altimeter Capital published an open letter accusing Meta of “drifting into the land of excess” with “too many people, too many ideas, too little urgency”.
He wants Meta to cut its overhead by 20% or US$5bn and cap the metaverse investment.
Whether Zuckerberg cares, or is even listening, must be debatable.
Even after the 70% slump in Meta’s share price this year, and the eye-watering drop in his own wealth, he is still worth just a little under US$50bn.
His direct holding in Meta is 13.6% but through agreements with other founders and fellow executives is said to control 55% of the voting shares or at least that was what one whistleblower claimed at a Congressional hearing last year.
So, if he wants to keep up the spending on the metaverse there seems very little outsiders can do to stop it except sell the shares.
And after another 20% drop overnight, it seems to be an option more and more are favouring.