According to those in the know, this week will see the start of massive layoffs at Meta Platforms Inc., maybe the greatest wave in the recent series of IT job losses after the industry’s tremendous development during the epidemic.
An announcement on the layoffs, which are anticipated to affect tens of thousands of workers, is due as soon as Wednesday, the individuals said. As of the end of September, Meta had around 87,000 workers. Company managers reportedly informed workers this week to postpone any non-essential vacation plans.
If carried out, the layoffs would be the first significant decrease in personnel at the corporation in its 18-year existence. Despite being less in absolute numbers, the number of Meta workers set to lose their jobs might be the greatest to yet at a major technology organization in a year that has witnessed a retrenchment in the tech sector.
Meta’s representative refused to comment, citing CEO Mark Zuckerberg’s recent declaration that the firm will “focus our funding on a limited handful of high priority development areas.”
On the company’s third quarter results conference on October 26th, he noted, “So that implies certain teams will expand considerably, but most other teams will remain flat or decrease over the following year.” We anticipate that by the end of 2023, our organization will be around the same size as it is now, or maybe even less.
In September, the Wall Street Journal reported that Meta planned to reduce spending by at least 10% in the next months.
After many months of more targeted workforce cutbacks, in which workers were either managed out or had their responsibilities abolished, layoffs are scheduled to be announced this week.
At the end of June, Mr. Zuckerberg told staff at a companywide meeting, “Realistically, there are probably a handful of individuals at the company that shouldn’t be here.”
During the epidemic, Meta and other digital titans embarked on a recruiting drive to keep up with the increasing importance of the internet in everyday life and commerce. It hired almost 27,000 people in 2020 and 2021 and 15,344 in the first nine months of this year, or about a quarter of that number in the most recent quarter.
The price of Meta stock has dropped by more than 70% this year. In addition to highlighting worsening macroeconomic trends, the firm has scared investors with its excessive expenditure and dangers to the company’s main social-media business. As a result of TikTok’s popularity and Apple Inc.’s policy of requiring users to opt-in to the surveillance of their devices, the ad targeting capabilities of many social networking sites have slowed or stopped altogether.
The growing unhappiness among shareholders was reflected in an open letter from investment company Altimeter Capital to Mr. Zuckerberg last month, in which it suggested that Meta should cut employees and scale down its metaverse goals.
Free cash flow for Meta fell by 98% in the most recent quarter as operating costs increased dramatically. In order to build Reels, Meta’s Instagram-based alternative to short-form video platforms like TikTok, and to better target advertisements with less data, the firm has had to make substantial expenditures in more processing capacity and artificial intelligence.
However, Mr. Zuckerberg’s dedication to Reality Labs, the company’s department in charge of VR/AR headsets and the development of the metaverse, is largely to blame for the company’s escalating expenditures. According to Mr. Zuckerberg, the metaverse is a group of nested virtual environments where people will live, work, play, and shop in the future.
Since the beginning of last year, the initiative has cost the corporation $15 billion. However, customers have been mainly disappointed despite the company’s extensive marketing of its Horizon Worlds virtual reality platform. The Journal reported last month that the number of people using Horizon Worlds had dropped significantly over the course of the year, to just under 200,000 users, or about the population of Sioux Falls, South Dakota.
On the most recent earnings conference, Mr. Zuckerberg told analysts, “I know that a lot of people could disagree with this investment.” Despite this, he reaffirmed his dedication to the venture. “I believe that decades from now, people will be talking about the significance of the work that was done here.”
Shares of Meta were downgraded and price targets were reduced by analysts after the conference call.
RBC Capital Markets analysts stated in a note last month that “management’s road plan & reasoning for this approach continue to not connect with investors.”