Shulou(Shulou.com)11/24 Report--

On the morning of November 1, Beijing time, it was reported that some major shareholders of Facebook parent company Meta were venting their anger against the management of the social media company. Wall Street was shocked by Meta's announcement that it planned to press ahead with the lossmaking meta-universe project.

Meta shares have fallen 74 per cent in the past year or so. However, investors and board experts say there is little outsiders can do to stop Meta chief executive Mark Zuckerberg from using his majority control to press ahead with a bet that has lost confidence on Wall Street.

Meta shares tumbled 25 per cent on Thursday. The company had previously revealed that the Reality Labs division, which is in charge of the meta-universe project, lost $9.4 billion in the first nine months of this year and that losses would increase "significantly" in 2023. Meta said investors were shocked that capital spending next year would be as high as $39 billion, more than double the level in 2021.

"if other companies do this, you will see activist investors start writing to the company, proposing a replacement list of board members and asking for changes," said Jim Tierney, chief investment officer for US growth at AllianceBernstein, a shareholder in Meta. I think Zuckerberg heard exactly what investors wanted. But he has made his own decision. "

Investor anger has spread to meetings with management. Zuckerberg himself has attended some of the meetings since Wall Street was rocked by the plan unveiled by Meta last Wednesday.

One person familiar with the matter said investors did seem angry at the ballooning costs of Meta.

After Wednesday's earnings call, Meta conducted a series of informal phone calls with investors. "when investors get a call from the company, they become more disgusted," says Mr Tierney. "

Carmignac, the investment agency, manages 33.2 billion euros in assets and holds stakes in Amazon, Microsoft and Google, but does not own Meta. "Zuckerberg turns a deaf ear to the voices of the investment community and doubles his bets on almost everything," said David Older, head of securities investment at the agency. "the timetable for the development of meta-universe is very tight. I don't think you'll know for five to 10 years if this is the right thing to do."

On how shareholder discontent will affect the company's plans, Meta responded: "We value the views of investors and communicate with them on a regular basis to ensure that we understand their respective views."

Like many companies, Meta will hold some investor meetings within days of reporting quarterly results, but Zuckerberg's personal control of Meta means he can ignore the views of other shareholders. Zuckerberg, the co-founder of Meta, owns 13% of Meta but controls 54.4% of the company's voting rights through a special class of shares.

Meta did not comment on whether shareholder discontent would lead to a redebate on the scale of spending within the company, but said: "Meta's management team, under the supervision of the board, is focused on implementing the company's key priorities with a view to creating long-term shareholder value."

In recent years, Zuckerberg's personal control of Meta is causing growing disappointment among investors. Meta has been at the center of the storm in a series of controversies over misinformation and the protection of user privacy, while the company has made a big bet on meta-universe. At Meta's annual general meeting earlier this year, a shareholder proposal to abolish super-voting shares received 28 per cent of the vote, up from 17 per cent in 2014.

Steve Diamond (Steve Diamond), a corporate governance expert at Santa Clara University Law School, said that Meta directors are legally responsible for representing all shareholders, even if Zuckerberg, as chief executive, controls the choice of the board. If the board is found to be "wasting" the company's resources, the court can intervene on behalf of shareholders, he said. However, the identification of this issue "has a very high standard" and has almost never been supported.

"I am surprised that they have spent so much money on the meta-universe project, but nothing has been achieved," Diamond said. if the CEO of the company had only a 1% stake, he would probably have left a long time ago. "

Due to the lack of formal ways to change the direction of Meta, potential activist investors among shareholders have to take a relatively moderate approach. Shortly before Meta released its latest earnings report last week, Brad Gerstner of Altimeter Capital tried to get Zuckerberg's attention in an open letter to Meta directors. He praised Meta's business, but urged the company to cut at least 20 per cent of its jobs, cut capital expenditure by $5 billion, and limit annual investment in metacosmos to $5 billion.

"everyone agrees with Brad Gerstner's open letter to Zuckerberg," said Carmignac's Ould. "you can own a great stock and invest 5 billion dollars a year in Metasmos, but you have to strictly control costs and make sure you invest in discipline."

In a conference call with analysts on Wednesday, Meta executives tried to appease analysts' unease. They point out that 82% of Meta's spending in the most recent quarter was spent on current services, not meta-universe.

Some tech investors say Mr Zuckerberg may have reason to be more aggressive, given the risks facing Meta. Firsthand Funds's Kevin Landis (Kevin Landis) points out that Apple's restrictions on apps collecting data through its devices to protect users' privacy will have a severe impact on Meta's advertising revenue. It also seems to convince Zuckerberg that he has no choice but to go all out to build the next generation of important computing platforms.

Landis said that the major transformation of the digital world in the past has brought about a large-scale transfer of value, which can also explain why Zuckerberg ignored dissent and continued to press ahead with the meta-universe project. "if we were in a typical governance structure, we would have a committee to make decisions, but there would be endless quarrels."

Mr Tierney said investors' dissatisfaction was largely due to Meta's failure to give any timetable to specify when the current big investment would pay off. "they spend 15 billion dollars a year on meta-universe, but they don't give us any signposts, they're just painting big cakes."

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.