Meta Platforms Inc. (NASDAQ: META | META Price Prediction), the parent of Facebook, is much too big according to one large shareholder. This shareholder wants the company to fire 14,000 people and exit several of its businesses. It would be another devastating blow to the fortunes of big tech companies, which grew at remarkable rates after the Great Recession and posted equally remarkable increases in their share prices.
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Meta’s share price rose to $380 in September 2021. It has fallen to $131, and many investors do not believe the slide is over. Like all other social media companies, it relies almost entirely on advertising revenue. Ad revenue has softened because of a slow economy. And Facebook’s user base is barely growing.
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The solution to Meta’s problem is for the company to move into the virtual reality business. Altimeter Capital Chair and CEO Brad Gerstner, who owns 2 million Meta shares, wants it to cut “pricey investments in ‘metaverse’ technology — VR software and hardware — to no more than $5 billion per year.” Just a year ago, it would have been hard to imagine an activist investor would have had the leverage to attack the largest tech companies, including, Alphabet, Amazon, Apple, Meta and Microsoft. Meta’s failures have made it a fairly easy target.
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However, the economic slowdown has not left the other big techs untouched. Microsoft has indicated it would have some staff cuts. Amazon has started to close some of the warehouses it opened during the pandemic. And these decisions are in advance of what could become a fairly harsh recession.
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Meta has lost its way, which has been general perception for months. CEO Mark Zuckerberg controls the company’s voting stock, so no one can force his hand. It cannot be lost on him that an outsider has made a very large investment and has taken the company to task in public. Will he take the layoff advice? If Meta’s stock price gets worse, he may.
Will Meta Fire 14,000 People?
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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