Facebook is planning to begin large-scale layoffs this week that will affect thousands of employees with an announcement planned as early as Wednesday.
Facebook parent company Meta Platforms Inc forecast a weak holiday quarter and significantly more costs next year wiping about $67 billion off Meta’s stock market value, adding to the more than half a trillion dollars in value already lost this year.
The disappointing outlook comes as Meta is contending with slowing global economic growth, competition from TikTok, privacy changes from Apple, concerns about massive spending on the metaverse and the ever-present threat of regulation.
The impending layoffs were first reported in the Wall Street Journal.
Chief Executive Mark Zuckerberg has said he expects the metaverse investments to take about a decade to bear fruit.
In the meantime, he has had to freeze hiring, shutter projects and reorganize teams to trim costs.
Facebook is planning to begin large-scale layoffs this week that will affect thousands of employees with an announcement planned as early as Wednesday. Facebook CEO Mark Zuckerberg is planning to lay off up to 12,000 underperforming Facebook workers
Meta’s share price has continued to plummet with a 73 percent fall since the start of 2022
Meta Platforms Inc. has been ranked the worst performer on the S&P500, as its shares continue to slump amid concerns over the development its costly virtual world – the Metaverse
Meta shareholder Altimeter Capital Management urged Mark Zuckerberg to cut the company’s workforce by 20 percent and investments in the Metaverse by 50 percent. Zuckerberg (above) has aggressively pushed billions of dollars into company’s VR projects
‘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.
The social media company had in June cut plans to hire engineers by at least 30%, with Zuckerberg warning employees to brace for an economic downturn.
Meta’s shareholder Altimeter Capital Management in an open letter to Mark Zuckerberg had previously said the company needs to streamline by cutting jobs and capital expenditure, adding that Meta has lost investor confidence as it ramped up spending and pivoted to the metaverse.
The push to cut thousands of jobs comes after reports that Meta was looking to slash 12,000 people from the company. Pictured: Employees in Meta’s Silicon Valley office at Menlo Park
Altimeter said annual free cash flow can be doubled to $40billion if Zuckerberg cuts 17,000 jobs, trimmed capital expenditure by at least $5billion to $25billion a year and capped annual investment in the Metaverse to $5billion instead of the current $10billion.
‘Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world,’ Altimeter CEO Brad Gerstner wrote in the letter. ‘In short, Meta needs to get fit and focused.’
Several technology companies, including Microsoft, Twitter and Snap have cut jobs and scaled back hiring in recent months as global economic growth slows due to higher interest rates, rising inflation and an energy crisis in Europe.
Meta has spent billions and hired thousands of employees around the world to build the Metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic.
But the company’s dreams have fallen short as the Reality Labs unit, which works on augmented and virtual reality, has continuously reported staggering losses. It lost $5.8billion in the first six months of the year.
Altimeter said such huge investments ‘in an unknown future is super-sized and terrifying, even by Silicon Valley standards’.
A report from WSJ last month said that Meta’s Metaverse is more than 300,000 users short of its year end goal despite Zuckerberg investing billions and hiring hundreds for the venture
Zuckerberg has repeatedly defended his decision to invest heavily in ‘Metaverse’
A little under a year since Zuckerberg rechristened Facebook as Meta, internal documents obtained earlier this month revealed that his Metaverse virtual reality universe is struggling to meet its goals.
That’s according to documents that were seen by the Wall Street Journal. The company planned to hit 500,000 users of its virtual reality platform, Horizon Worlds, by the end of 2022. The number at the time of writing is less than 200,000, still well below a revised goal of 280,000 by the end of 2022.
The documents also reveal that the majority of those 200,000 users, don’t come back after entering the system once with many complaining most of the areas are bereft of other users.
They’ve also complained of avatars floating around eerily with no legs – an issue Meta says it’ll fix in the coming months.
Since the Spring of 2022, the number of users of Horizon Worlds has been declining.
Less than ten percent of the worlds in the Metaverse receive more than 50 visitors and the majority of these worlds receive zero visitors.
Zuckerberg has claimed that the Metaverse is the future despite several negative reviews about how its virtual world looks and operates