Michael Porter defines strategy as competitive position, “deliberately choosing a different set of activities to deliver a unique mix of value.”
Since 1 year ago the META shares have decreased approx. 2.5x and the pain is real: yesterday they announced that the metaverse “investments” are actually $15 billion…not $10 (to be read: losses). Additionally, the overall revenue dropped by 4%.
Here is a situation summary from Martin Peers (The Information): “The lesson seems to be that tech companies, which pride themselves on moving fast as they’re growing, get caught flat-footed when it comes to cutting back in adverse economic times.”
What should META do? Marc Gerstner from Altcap, a significant shareholder, sent an open letter to Mark Zuckerberg asking:
“1/ Reduce headcount expense by at least 20%;
2/ Reduce annual capex by at least $5 B from $30B to $25B; and
3/ Limit investment in metaverse / Reality Labs to no more than $5B per year.”
Like I said in another post, companies like META are “TGV trains”, they CAN’T enter anymore in the “start-up mode” and should focus on what are they good at. For this META should revisit the strategy definition.
Source: Yahoo Finance