Barely a few days after Elon Musk-owned Twitter began conducting thousands of job cuts last week, another tech giant seems set to join the?mass layoff?list.?
Facebook¡¯s parent company Meta Platforms is planning to begin large-scale layoffs this week, according to people familiar with the matter. This could be the largest layoff round amid the large-scale tech job cuts happening in recent months.
The layoffs are expected to affect thousands of employees and an announcement is to come as soon as Wednesday, according to the people, as per the Wall Street Journal.
Meta had reported more than 87,000 employees at the end of September 2022. Company officials have already told employees to cancel nonessential travel beginning this week.
The planned layoffs would be the first broad head-count reductions to occur in the company¡¯s 18-year history. The number of Meta employees expected to lose their jobs could be the largest to date at a major technology firm in a year that has seen a tech-industry retrenchment, the report mentioned.?
Meta CEO Mark Zuckerberg had recently stated that the company would ¡°focus our investments on a small number of high priority growth areas,¡± adding that it means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. ¡°In aggregate, we expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.¡±
Hinting at possible layoffs earlier this year, Mark Zuckerberg had told employees at a companywide meeting at the end of June: ¡°Realistically, there are probably a bunch of people at the company who shouldn¡¯t be here.¡±
As per the Wall Street Journal report, Facebook parent Meta, like other tech giants, had gone on a hiring spree during the pandemic as life and business shifted more online.?
Meta added more than 27,000 employees in 2020 and 2021 combined, and added a further 15,344 in the first nine months of this year, i.e about one-fourth of that during the most recent quarter. And with the economic slowdown this year, tech giants like Meta are resorting to large-scale layoffs to cut costs.
Also Read:?Zuckerberg's?Meta?Slips Out Of World's Top 20 Companies List
Tech giant Meta¡¯s stock has already fallen more than 70% this year. The company had highlighted deteriorating macroeconomic trends, but investors have also been spooked by its spending and threats to the company¡¯s core social-media business.
Meta¡¯s expenses have also risen sharply, causing its free cash flow to decline 98% in the most recent quarter. Some of the company¡¯s spending stems from heavy investments in the additional computing power and artificial intelligence needed to further develop Reels, Meta¡¯s TikTok-like short-form video platform on Instagram, and to target ads with less data,
But much of Meta¡¯s ballooning costs stem from Mark Zuckerberg¡¯s commitment to Reality Labs, a division of the company responsible for virtual- and augmented-reality headsets as well as the creation of the metaverse. Zuckerberg has billed the metaverse as a constellation of interlocking virtual worlds in which people will eventually work, play, live and shop, the report mentioned.
The effort has cost the company $15 billion since the beginning of last year.?¡°I get that a lot of people might disagree with this investment,¡± Meta CEO Zuckerberg had told analysts on the company¡¯s Q3 earnings call last month before reaffirming his commitment. ¡°I think people are going to look back on decades from now and talk about the importance of the work that was done here.¡±?
After the disappointing Q3 results, worrisome Q4 forecast and Zuckerberg's response, analysts, including Morgan Stanley, had downgraded their rating of Meta¡¯s stock and slashed price targets.?
Also Read:?Meta?Raises $10 Billion In Its First Ever Bond Offering