Meta Platforms (Nasdaq: META) is expected to lay off staff this week in what would be considered the most significant job cuts at the company since 2004.
According to people familiar with the matter who told The New York Times, it is still unknown how big of a downsizing the tech firm will implement and which departments would be hit the most.
The report comes after CEO Mark Zuckerberg sounded a grim outlook back in July that the firm would slash 30% of its hiring plans this year, as the company braces for what he calls “one of the worst downturns that we’ve seen in recent history.” From the original plan to hire 10,000 new engineers in 2022, the tech giant now looks to scale that down to 6,000 – 7,000 new employees.
The tech giant had 87,314 employees at the end of September, a 28 percent increase over the previous year.
In addition, Zuckerberg also then hinted at a tighter employee performance management evaluation, possibly leading to layoffs of “a bunch of people at the company who shouldn’t be here.”
“Part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn’t for you, and that self-selection is OK with me,” he added.
Chief Product Officer Chris Cox echoed the sentiment on having “leaner, meaner, better executing teams,” highlighting the company’s six investment priorities–presumably, the departments that would see less job cuts: metaverse (Avatars and Horizon Worlds + Platforms), Reels + Discovery engine, community messaging (WhatsApp and Messenger), artificial intelligence, privacy, and monetization.
Back in September, Meta also dissolved its Responsible Innovation team, which is supposed to police potential ethical issues caused by their products Facebook, Instagram, and WhatsApp.
The company is fighting the declining state of its financials, as it expects more losses coming from its metaverse unit. In Q3 2022, the firm recorded a slump in its revenue, ending at US$27.71 billion which is down both sequentially and year-on-year. The firm cited a slew of issues, including a difficult macroeconomic environment, increased competition from rival TikTok, and the repercussions from Apple Inc.’s ad-tracking modifications, all of which have weighed heavily on its enormous advertising business.
What increased in Meta’s financials is total operating costs, ending at US$22.05 billion for the quarter, up from last quarter’s US$20.46 billion and last year’s US$18.59 billion. Hugely dragging the bottomline down is the net operating loss coming from the Reality Labs segment, amounting to US$3.67 billion from last quarter’s US$2.81 billion–pushing the total losses year-to-date to US$9.44 billion.
Layoffs have been sweeping the big tech names recently. Lyft also said last week that it would lay off 13% of its workforce, or approximately 650 of its 5,000 employees. Stripe, a payment processing company, said that it would lay off 14% of its workforce, or approximately 1,100 people. Galaxy Digital also recently reported it is looking at cutting its employee size by 20%.
Other startups that have announced job losses this year include Snap, Robinhood, and Coinbase.
Another social media giant, Twitter, has undergone a massive layoff of approximately 3,700 people–although this is more related to new owner Elon Musk’s plan to maximize the revenue potential of the platform.
Canaccord Genuity Capital Markets reiterated their buy rating following Meta’s financial results. Still, they slashed their 12-month price target to US$200 from US$250, saying that a strong USD and the challenging macro backdrop is “expected to drive a further top-line contraction.”
Meta Platforms last traded at US$96.60 on the Nasdaq.
Information for this briefing was found via The New York Times and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
