Meta is ready to fire thousands of employees as a result of the economic crisis. For Mark Zuckerberg’s company, this is a first.
The company, which owns Facebook, WhatsApp, and Instagram, plans to reduce its size. Our colleagues at the Wall Street Journal report that the Californian company would soon fire thousands of workers. The media reports that an announcement should happen starting on Wednesday, November 9, 2022, citing persons with knowledge of the situation. Meta would have issued a warning asking staff to delay travel plans.
The size of the layoffs is a record in Meta’s history. The organization, which was previously known as Facebook, has grown linearly since its creation in 2004. And has gradually added to its employees.
Like many other companies in the sector, Meta hired a large number of people during the Covid-19 outbreak. Actuality, the company hired 27,000 people between 2020 and 2021. The number of employees at Meta increased by 15,344 over the first nine months of 2022. A total of 87,000 people were working for Meta as of September 30, 2022, in all countries.
It is yet unknown how many of these employees will be let go. The Wall Street Journal claims that this may be the largest layoff plan by a technology brand.
Massive losses for Meta
This round of layoffs comes in response to the business’ bad financial performance. Meta reported revenue of 27.71 billion dollars at the end of October, 4% lower than the previous year. Contrary, the net profit has been lower by 50% in just one year.
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These findings are mostly attributable to the decline in revenue from the internet advertising and to the significant investments made for the metaverse. Over 21 billion dollars of investments in the past two years went to develop Horizon Worlds. It’s the group’s meta verse, and virtual reality related technology. Consequently, the meta verse appears to investors as a vast financial pit.
Mark Zuckerberg had already made a note that a staff cut would be coming soon. On the margins of the findings’ publication. However, the leader had ruled out the possibility of significant layoffs. Facebook’s founder had also made an effort to underestimate the findings by saying a number of things:
“We are dealing with an unstable macroeconomic environment, increased competition, advertising targeting issues and rising costs for our long-term investments, but I have to say that our products seem to be doing better than some reviews say”.
Despite Zuckerberg’s remarks, Meta’s market value declined once more after the release of its quarterly results. The company’s capitalization is lower by around 600 billion dollars in the past year.
According to the report, Meta plans to reduce spending by at least 10% over the next months. By letting go of some of its employees. There would be other plans for action in this direction.
Tech industry layoffs in large numbers
As a result of the crisis, Meta is not the only organization to let go of some of its staff. The majority of Twitter’s employees worldwide were let go last week. Elon Musk, the current owner of the social network, is making every effort to cut costs for the business. Whose financial situation would be bad. Elon claims that Twitter is losing millions of dollars every day.
The same thing happened to Uber’s rival Lyft and the online payment company Stripe. Which laid off 14% of its staff. 13% of the barnd’s employees have been let go. The giant Amazon, on the other hand, was happy to stop hiring at its offices.
“We are facing persistent inflation, energy shocks, higher interest rates, shrinking investment budgets and scarcer funding for startups,” said Patrick Collison, CEO of Stripe, after the layoffs.
These layoffs, according to financial analyst Neil Saunders, point that “the heady days of expansion are now ended”.