Meta to begin large-scale layoffs this week: report [Video]

WHAT YOU NEED TO KNOW:

• Facebook parent company Meta could announce large-scale layoffs as early as Wednesday.
• Meta has already lost over half a trillion dollars in value this year and is expected to lose millions more.
• As the company focused its investments on the metaverse, it had to cut down on expenditures by halting other projects, reorganizing teams, and putting a freeze on hiring.

Thousands of employees of Facebook parent company Meta Platforms Inc (META.O) could be losing their jobs this week, according to a report from the Wall Street Journal on Sunday. The report, which cited sources familiar with the matter, said that Meta plans to announce large-scale layoffs as early as Wednesday.

Meta has yet to give a statement regarding the report from the Wall Street Journal.

The company already lost over half a trillion dollars in value this year. In October, it forecasted another weak holiday quarter and significantly higher costs next year. This could wipe around $67 billion off Meta’s stock market value, on top of this year’s losses so far.

Meta is facing a growing number of hurdles amid slowing global economic growth. It also has to contend with the ever-present threat of regulation, investor concerns about massive spending on the metaverse, competition from TikTok, and privacy changes from Apple (AAPL.O).

As Meta focused its investments on the metaverse, it had to shutdown other projects, reorganize teams, and freeze hiring to cut down on expenditures. Chief Executive Mark Zuckerberg believes that it will take about a decade before they see the returns of the metaverse investments.

In June, Meta reduced hiring for engineers by at least 30%. Zuckerberg also warned staff to brace for the economic downturn.

On the last earnings call in late October, he said that their investments in 2023 will be focused “on a small number of high priority growth areas.”

Zuckerberg stated, “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.”

Altimeter Capital Management, a Meta shareholder, wrote an open letter to Zuckerberg late in October. It said that the social media giant has lost investor confidence after it shifted its focus and spending to the metaverse. It then advised the company to streamline by cutting down on jobs and capital expenditure while limiting its investment on the metaverse.

Rising inflation, higher interest rates, and an energy crisis in Europe has driven a slowdown in global economic growth. This led to thousands of layoffs and hiring shutdowns in several big tech companies, such as Microsoft Corp (MSFT.O), Snap Inc (SNAP.N), and Twitter Inc.

Source: Reuters