The Wall Street Journal reported on Sunday, citing people familiar with the situation, that Meta Platforms Inc (META.O) intends 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 unfavorable forecast comes as Meta struggles with the declining global economy, TikTok’s rivalry, Apple’s (AAPL.O) privacy improvements, worries about big spending on the metaverse, and the constant danger of legislation.
According to Chief Executive Mark Zuckerberg, it will take about 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.
“We’re planning to concentrate our efforts in 2023 on a select few high priority growth sectors. This indicates that while most teams will remain flat or contract during the upcoming year, certain teams will experience considerable growth. Overall, we anticipate that by 2023, we will be either around the same size or even a little bit smaller than we are now “On the most recent earnings call in late October, Zuckerberg said.
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.
As global economic growth slows due to increasing interest rates, rising inflation, and a European energy crisis, several technological businesses, including Microsoft Corp (MSFT.O), Twitter Inc., and Snap Inc. (SNAP.N), have reduced recruiting in recent months.