Following the plunge in Meta’s revenue, which saw it fall to the lowest since 2019, the company plans to lay off a large-scale of its employees.
In a report according to insider sources, Meta which witnessed a 24% fall in its shares price in October, disclosed that the massive lay-off of workers was necessary, and a possible retrenchment may begin as soon as possible.
While announcing Meta’s unimpressive third quarter (Q3) result with a revenue of $27.71 billion, the company’s CEO Mark Zuckerberg said that there would not be an increase in Meta’s staff by the end of 2023, which might even decrease slightly.
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Facebook joins the likes of Twitter and Stripe which are recently laying off members of their workforce due to the global economic situation that is forcing them to downsize.
Since the start of the year 2022, Meta shares have been down by more than 61% due to fierce competition from rival video-sharing platform TikTok, plus a broad slowdown in online ad spending and challenges from Apple’s iOS privacy update.
The company’s CEO Mark Zuckerberg in July had signaled to employees of tough times ahead as the company was recording a massive decline in revenue and share price. He also told Meta’s employees that they should be prepared to do more work with fewer resources.
“I think some of you might decide that this place isn’t for you, and that self-selection is OK with me. Realistically, there are probably a bunch of people at the company who shouldn’t be here,” he said.
The third quarter of 2022 was another disappointing three-month period for Meta, as the Facebook parent company posted revenue of $27.71 billion, a decline of 4% from $29.01 billion recorded in the third quarter of 2021.
The company’s disappointing quarter and weak outlook further underline the view that advertisers have been cutting back on spending as the overall economy battles with inflation, higher interest rates, and shifting consumer patterns.
The social media platform is also being negatively impacted by worsening macroeconomic headwinds, such as soaring inflation and worries about a possible recession. Meta had warned that the fourth quarter would be more of the same outcome as previous quarters, with a weaker-than-expected outlook.
The company expects the revenue for the fourth quarter to be $30 billion to $32.5 billion, while analysts have predicted sales of $32.2 billion. Meta’s CEO Mark Zuckerberg reiterated his commitment to spending billions of dollars developing the metaverse.
The company’s reality Labs unit, which is responsible for developing the virtual reality and related augmented reality technology that underpins its plans for the metaverse, has lost $9.4 billion so far this year.
“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” Zuckerberg said on the last earnings call in late October.
He further disclosed that he expects the metaverse investments to take about a decade to bear fruit. In the meantime, he has been forced to freeze hiring, cut the workforce, shutter projects and reorganize teams to trim costs.