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The Wall Street Journal reported on Sunday, citing people familiar with the situation, that Meta Platforms Inc. plans to start mass layoffs this week that will effect thousands of employees. An announcement is expected as early as Wednesday.
Meta chose not to respond to the WSJ article.
In October, Meta, the parent company of Facebook, predicted a dismal Christmas quarter and much higher costs in 2019, which will reduce Meta’s stock market value by around $67 billion and add to the more than half a trillion dollars in value already lost this year.
The unimpressive prognosis comes as Meta struggles with the declining global economy, TikTok’s rivalry, Apple’s privacy improvements, worries about big spending on the metaverse, and the constant danger of regulation.
According to Chief Executive Mark Zuckerberg, it will take around ten years for the investments in the metaverse to pay off. To save costs in the interim, he was forced to halt employment, cancel projects, and rearrange personnel.
“In 2023, we’re going to focus our investments on a small number of high priority growth areas. So that 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” Mark Zuckerberg said on the last earnings call in late October.
The social media business had reduced its ambitions to hire engineers by at least 30% in June, and Mark Zuckerberg had advised staff to prepare for a slowdown in the economy.
In a previous open letter to Mark Zuckerberg, Meta’s shareholder Altimeter Capital Management stated that the company needed to streamline by eliminating positions and capital expenditures. They also stated that investors had lost faith in Meta as a result of its increased spending and pivot to the metaverse.
Because of increased interest rates, rising inflation, and a European energy crisis, several technological businesses, including Microsoft Corp., Twitter Inc., and Snap Inc., have reduced employment in recent months.