Facebook’s parent Meta is laying off 11,000 people, about 13% of its workforce, as it struggles with shaky revenues and the broader challenges of the tech industry, said CEO Mark Zuckerberg in letter to employees on Wednesday.
The layoffs come just a week laterunder the new owner, billionaire Elon Musk. Other tech companies that hired people quickly during the pandemic have experienced numerous job cuts.
Zuckerberg said he made the mistake of switching to aggressive hiring earlier, expecting rapid growth even after the pandemic ended.
“Unfortunately, it did not go as expected,” said Zuckerberg in a prepared statement. “Not only has online trading returned to previous trends, but the macroeconomic slowdown, increased competition and a loss of ad signal have resulted in our revenues being much lower than expected. I made a mistake and I take responsibility for it.
Meta, like other social media companies, enjoyed financial growth in the pandemic era as more people stayed home and scrolled through their phones and computers. However, as the lockdowns ended and we ventured out again, revenue growth began to wane.
“Train Wreck” Meta
The economic downturn and the bleak prospects of Internet advertising – by far Meta’s biggest source of revenue – have contributed to the Meta woes. This summer, Meta saw its first-ever quarterly decline in revenue, followed by another, larger decline.
Meta shares have declined by more than 70% this year, down from 32% for the high-tech Nasdaq Composite index. At the end of October, Meta lost more or lesswhich led one Wall Street analyst to call it a “train wreck.” The company’s share price rose 4% before trading began on Wednesday to $ 100.57.
Some problems are specific to the company, while others are related to broader economic and technological forces.
Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic renovation when Musk took the helm. He tweeted that he had no choice but to cut jobs “when the company is losing more than $ 4 million a day,” although he did not provide details of the losses.
Other major tech companies, including Amazon, owner of Google Alphabet, ride-sharing player Lyft, and payment provider Stripe, have either announced layoffs or suspended hiring amid concerns about a potential recession next year.
“The cut at Meta is one of the largest to date in any company (not just in the tech industry) and we believe this heralds additional job cuts in Corporate America,” said analyst Adam Crisafulli of Vital Knowledge in the investor report.
The meta has upset investors by contributing more than $ 10 billion a year to the metaverse, diverting attention away from social media. Zuckerberg predicts that the metaverse, the immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Meta and its advertisers are gearing up for a potential recession. There is also the challenge of Apple’s privacy tools making it difficult for social media platforms such as Facebook, Instagram, and Snap to track people without their consent and target them with ads. Competition from TikTok is also a growing threat as younger people flock to Instagram’s video sharing app, which Meta also owns.
“Basically, we’re making all of these changes for two reasons: our revenue forecasts are lower than expected earlier this year, and we want to make sure we’re operating efficiently with both Family of Apps and Reality Labs.” Zuckerberg said in his message to employees.
Meta will offer redundant workers the equivalent of 16 weeks of basic salary plus two additional weeks for each year they work with the company. Meta will also pay for health insurance for them and their families.
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