Meta Up 1.5% in Premarket Amid Reports of More Downsizing
Facebook’s parent Meta plans to kick off another round of layoffs as the company seeks to restore profitability. The move comes as the tech giant laid off 11,000 people, or 13% of its total workforce, last year to trim costs amid growing recession fears. After the news, Meta’s stock went up 1.5% in premarket trading.
Meta to Let Go of Thousands More
Meta plans to lay off thousands of employees as soon as this week, Bloomberg reported Tuesday, citing people familiar with the matter. The new job cuts come as the world’s largest social networking company seeks to become a more efficient organization.
The report detailed that financial targets are driving the upcoming round of cuts as Meta has seen a slowdown in advertising revenue. The company has reportedly asked directors and vice presidents to make lists of employees that can be fired.
The new phase of layoffs is expected to be finalized by next week before Chief Executive Officer Mark Zuckerberg goes on parental leave for his third child, Bloomberg said, citing a person familiar with the matter.
As reported, tech companies have been aggressively downsizing their teams amid the global financial rout. However, despite the massive layoffs, most tech companies still have more workers than at the start of Covid, underscoring Big Tech’s breathtaking hiring spree during the pandemic.
Meta Led the Largest Round of Layoffs Last Year
Meta kicked off the layoffs trend among tech giants in November last year amid exacerbating financial outlook. At the time, the company announced plans to lay off 11,000 employees, the biggest last year and the first in the company’s history.
In February, the company announced further plans to flatten its organization, asking many of its managers and directors to transition to individual contributor jobs or leave the company as it tries to become more efficient, Bloomberg reported.
The imminent round of layoffs should not come as a surprise, given that Zuckerberg has said that 2023 will be “the year of efficiency” for the tech giant. “Our management theme for 2023 is the ‘Year of Efficiency,’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said as part of the release of Meta’s fourth-quarter earnings report.
The new profitability theme has positively impacted Meta stock, which has risen sharply since the start of the year. The company’s shares are up more than 53% YTD, making Meta the best performer among ‘Big Tech’ names. However, it’s still down nearly 3% on a 12-month view and is down by more than half from its 2021 peak.
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Meta Lost Billions on its Metaverse Push
It is worth noting that Meta lost billions of dollars last year on the metaverse. According to Meta’s forecasts, the company’s bet on the virtual world cost it $9.4 billion in 2022, and the figure could increase to a whopping $100 billion in 2023.
Zuckerberg previously said that it might take more than a decade before Meta can reap its metaverse rewards. During Meta’s Q1 2022 earnings call, Zuckerberg said that he didn’t expect the company’s metaverse and XR investments to flourish until the 2030s.
Furthermore, Meta’s flagship metaverse platform Horizon Worlds has fallen short of expectations, forcing the company to lower its target. Reportedly, the metaverse platform is plagued with bugs and problems, and there have also been user complaints about the quality of the virtual world.
Nevertheless, Meta shares are currently up 1.5% in the pre-market trading amid optimism around the company’s plans to trim costs and restore profitability.
Do you think Meta will further cut jobs this year? Let us know in the comments below.