This week, 24/7 Wall St. will list four candidates for the “Worst CEO of 2022” title. Among the yardsticks will be stock price, strategic blunders and whether these chief executives have volunteered to resign or take large cuts in compensation when they dismiss workers.
The first nominee is Mark Zuckerberg, founder, CEO and controlling shareholder of Meta Platforms, the parent of Facebook. Zuckerberg’s special class of shares allows him to make whatever decisions he wants to without any challenge from the board or large shareholders.
Meta’s stock has fallen 64% this year. This drop is extraordinary, despite a sharp sell-off in mega-cap tech stocks. In the process, Meta’s market cap has dropped by $400 billion. Perhaps shareholders can take some comfort that Zuckerberg’s net worth has shrunk by tens of billions of dollars in the process.
Facebook always has relied on advertising for most of its revenue. Zuckerberg cannot be blamed for the ad sector’s sharp decline, primarily because of a soft economy. Facebook’s user growth has slowed considerably. Facebook has close to 3 billion monthly active users and may have neared a saturation point. In other words, Zuckerberg cannot be held to account for the fact that everyone in the world who might use Facebook already does.
Zuckerberg’s sin is his attempt to create a huge new business with only a limited relationship to Facebook’s core success. In the most recent quarter, Meta revenue dropped 4% to $27.7 billion. However, expenses rose 19% to $22.1 billion. So, as ad revenue slowed, Zuckerberg decided to create the Metaverse.
At the end of September, Meta had 87,314 employees, up by 28% year over year. The sole reason behind this was Zuckerberg’s concept of his new business. Meta’s “Reality Labs” division builds products for Meta’s move into the virtual reality part of its metaverse. Very few people have been able to translate exactly what that means. Nevertheless, Reality Labs lost $3.7 billion in the third quarter.
After the financial results were announced, Zuckerberg laid off 11,000 workers. As they were pushed out the door, he had the decency to say, “I want to take accountability for these decisions and how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.” That and $0.60 will allow those people to mail a First-Class letter.
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