Meta, the parent of Facebook released a message, revealing more than 11,000 “talented employees” will be released, which is 13% of the total workforce. The founder of Facebook said he takes accountability and is “especially sorry” to the impacted. He also pointed out misjudgments in investments, the weak ad market and the macroeconomic downturn as some of the reasons for the mass layoff.
Meta fires 11,000 employees to save costs
Meta Platforms Inc said on Wednesday it will let go of 13 percent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year as the Facebook parent battles soaring costs and a weak advertising market. The broad job cuts, the first in Meta’s 18-year history, follow thousands of layoffs at other major tech companies including Elon Musk-owned Twitter and Microsoft Corp.
“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Chief Executive Officer Mark Zuckerberg said in a message to employees.
The executive revealed that predictions on how the online world will move forward after COVID did not play out as expected, and the company faced increased competition, ad loss, leading to diminished revenue. Meta “needs to become more capital efficient” and will shift resources onto a smaller number of high-priority growth areas like the AI discovery engine, as well as the long-term vision for the metaverse.
The company will also scale back budgets, reduce perks and will shrink the real estate footprint, meaning employees will have to share desks in the future. All these measures are not enough to keep the revenue growth, and that’s why Zuckerberg decided to release 13% of the total workforce.
Meta, the parent company of Facebook, WhatsApp and Instagram, reported gross ad revenue of ₹16,189 crore, growing at 74 per cent year-on-year. Globally, Meta posted third-quarter earnings of $4.39 billion, down from $9.2 billion. Meta’s flagship platform Facebook has been losing users in the face of competition from the likes of TikTok, and the company’s pivot to the metaverse is yet to bear fruit.
Meta’s stock rose about 4% in premarket trading on Wednesday after Meta announced the layoffs and was up more than 7% as of 11:25am EDT. The stock has fallen 70% on the year on concern about the company’s spending and weak earnings. It fell to its lowest since 2016 last Thursday, wiping out more than $89 billion of market value, after reporting a drop in revenue in the second quarter.
