Finally, Meta Aims Massive Layoffs After Zuck’s Metaverse Plans Fail

Meta Platforms is planning to begin layoffs that will affect thousands of workers from this week

Meta Platforms Inc., the parent company of Facebook, is planning to impose its first significant mass layoff later this week which may affect many thousands of employees, according to the Wall Street Journal (WSJ). The job cuts could come as early as Wednesday, the newspaper said. The company has already told employees to cancel non-essential travel from this week, according to the report.

Meta reported more than 87,000 employees at the end of September. Company executives already told employees to cancel nonessential travel beginning this week, the people said. The planned layoffs would be the first broad head-count reductions to occur in the company's 18-year history.

Meta shares rose as much as 3.5 percent during premarket trading in New York on Monday. The stock has declined about 73 percent for the year through Friday, when it closed at US$90.79 a share.

Chief Executive Officer Mark Zuckerberg September outlined plans to reorganize teams and reduce headcount for the first time, following a sharp slowdown in growth at the parent of Facebook and Instagram. Zuckerberg said then that Meta will likely be smaller in 2023 than it was this year.

In June, Meta's chief product officer Chris Cox warned employees of "serious times", saying that the workers must "execute flawlessly in an environment of slower growth".

During the company's earnings call last month, Zuckerberg said: "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," he had mentioned.

Meta posted another quarterly revenue decline in Q3 as investors began to lose faith in its loss-making, billion-dollars metaverse dream.

In the third quarter (Q3), Meta's revenue declined 4 percent year over year to hit US$27.7 billion. This decline was owing to Meta's huge losses in Reality Labs, Meta's virtual reality division, which lost $3.672 billion in Q3.

Meta investors have called on the company to reduce its workforce by at least 20 percent and stop making investments in the metaverse.

Meta's shareholder Altimeter Capital Management had previously said in an open letter to Zuckerberg that the company needed to streamline by cutting jobs and capital expenditure. It said Meta had lost investor confidence as it ramped up spending and pivoted to the metaverse.Amid a tightening ad market, Meta has also said it expects to lose US$10bn in ad revenue in 2022 as a result of privacy changes by Apple which allow its users to opt out of the company being able to track users across apps.

The potential job cuts come just days after Twitter slashed nearly half of its workforce following the takeover of the company by the billionaire Elon Musk.