The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk. There have been many job cuts at other tech companies that have been hiring quickly during the pandemic. Zuckerberg said he had made a mistake earlier moving to aggressive hiring, expecting rapid growth even after the pandemic ended. “Unfortunately, this didn’t turn out the way I expected,” Zuckerberg said in a prepared statement. “Not only has online commerce returned to previous trends, but the macroeconomic downturn, increased competition and the loss of an ad signal have caused our revenue to be much lower than I expected. I was wrong and I take responsibility for it.” Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown as more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going out again, revenue growth began to falter.
Meta’s “train wreck”.
An economic slowdown and a bleak outlook for online advertising — by far Meta’s biggest source of revenue — have contributed to Meta’s woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, larger decline in the fall. Parent company for Facebook, Instagram lays off more than 11,000 workers 05:04 Meta shares have fallen more than 70% this year, compared with 32% for the tech-heavy Nasdaq Composite. As of late October, Meta had lost about $700 billion in market value, prompting one Wall Street analyst to call it a “train wreck.” The company’s share price rose 4% in pre-market trading on Wednesday to $100.57. Some of the pain is company-specific, while some is tied to broader economic and technological forces. Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm. He tweeted that he had no choice but to cut jobs “when the company is losing over $4 million/day,” though he did not elaborate on the losses. “The Meta reductions are among the largest to date of any company (not just tech), and we believe they portend additional staff cuts for Corporate America,” Vital Knowledge analyst Adam Crisafulli said in a note to investors. Twitter asks dozens of former employees to return days after mass layoffs 06:11 Meta has worried investors by pouring more than $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts that the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology. Meta and its advertisers are preparing for a possible recession. There’s also the challenge of Apple’s privacy tools, which make it harder for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them. Competition from TikTok is also a growing threat as younger people flock to the video-sharing app over Instagram, which Meta also owns. “Essentially, we’re making all of these changes for two reasons: Our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently across both our family of apps and Reality Labs.” Zuckerberg said in his message to employees. Meta will offer laid-off workers the equivalent of 16 weeks of their base salary, plus an additional two weeks for each year they have been with the company. Meta will also cover the cost of health insurance for them and their families.
