Meta's Moonshot Puzzle

Do investors in Facebook’s parent want to bet on virtual reality, too?

Mark Zuckerberg is running low on believers in his vision of a virtual reality future—at least among Meta shareholders. Some analysts say the company’s chief executive officer is pitching the wrong audience.

Meta Platforms Inc. is essentially running two operations: the social media platforms including Facebook and Instagram, which make all the money, and a massive project called Reality Labs that’s trying to build a digital world called the metaverse. While it’s not unusual for a technology company to invest heavily in a moonshot, Meta’s bet has become divisive at a moment when its social media revenue is slipping. “They are really taking on a massive science project— it’s essentially the Manhattan Project,” says Kamran Ansari, a venture partner at Greycroft Partners and early angel investor in Meta back when it was called Facebook.

Meta’s stock has fallen more than about 70% this year, and on Nov. 9 the company announced it was cutting 11,000 jobs, or 13% of its workforce. Shareholders are valuing every dollar of the company’s sales at half those of Alphabet, Pinterest and other peers, and a third less than Snap’s or the average company’s in the Nasdaq 100 index. Research firm Monness, Crespi, Hardt & Co. wrote that Wall Street sees Meta’s virtual reality aspirations as the “enemy within the walls.” Shareholder Altimeter Capital Management has called on the company to cut its “super-sized and terrifying” metaverse investment to half of what it spent last year.