Key Sentence:
- Meta Platforms Inc., plans mass layoffs this week, affecting thousands of employees.
- The layoffs could affect “tens of thousands” of employees and could occur as soon as Wednesday.
- Meta is considering a hiring freeze and job cuts.
Meta Platforms Inc. plans to begin mass layoffs this week, affecting thousands of employees. According to a Wall Street Journal report, the layoffs could affect “tens of thousands” of employees and could occur as soon as Wednesday. In October, Facebook parent company Meta forecast a weak holiday quarter and significantly higher costs next year, wiping $67 billion off Meta’s stock market value, adding to the more than $500 billion in value already lost this year.
Why Is Meta Planning Layoffs?
Meta’s stock dropped by 20% last month after the company reported lower-than-expected earnings and was chastised for mistakes such as spending $4 billion on the metaverse in the most recent quarter. This is due to Meta dealing with slowing global economic growth, TikTok competition, and Apple privacy changes.
Another reason for the downsizing could be the massive spending on the metaverse as well as the constant threat of regulation. CEO Mark Zuckerberg has stated that he expects the metaverse investments to bear fruit in about a decade. In the meantime, he has had to put hiring on hold, close projects, and reorganize teams in order to save money.
“In 2023, they were going to focus their investments on a small number of high-priority growth areas,” Mark Zuckerberg said on the last earnings call in late October. So, he further added, that meant some teams would meaningfully grow, but most other teams would stay flat or shrink over the following year. In aggregate, Zuckerberg continued, “we expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.”
Remarkable layoffs this year
In June of this year, Facebook reduced engineering hiring by 30% and warned employees to brace for an economic downturn. Altimeter Capital Management, a Meta shareholder, previously stated in an open letter to Mark Zuckerberg that the company needs to streamline by cutting jobs and capital expenditure and that Meta has lost investor confidence as it ramped up spending and shifted to the metaverse.
Several tech companies, including Twitter, Amazon, Apple, and now Meta, have made headlines for mass layoffs. Amazon has put a halt to “new incremental” hiring across its entire workforce. Apple has “stopped almost all hiring,” a move that could last until late 2023.
For the first time in history, social media behemoth Meta is considering a hiring freeze and job cuts. Microsoft laid off approximately 1,000 employees last month. Twitter recently laid off half of its employees after Elon Musk took over the microblogging site.
