Social media giant Meta is set to announce large-scale layoffs this week that are expected to impact thousands of employees, unnamed sources familiar with the matter told the Wall Street Journal. The announcement could arrive as early as Wednesday, they added.
In June, Facebook’s parent Meta cut its hiring plans by 30% and CEO Mark Zuckerberg warned staff to brace for a deep economic downturn. In September, he also reportedly said that they would stop hiring, reduce headcount and reorganize its teams due to the economic uncertainty, another source told Bloomberg at the time.
Last month, Meta shared its earnings results for the third quarter ended September 30, reporting a revenue of $27.71 billion, down 4% Y/Y. But it was something that the company was already expecting. After sharing its results for Q2, when it saw its first-ever-revenue drop, it had said Q3 revenue could be even lower. It now expects fourth quarter revenue to be between $30 billion – $32.50 billion.
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“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,’’ Zuckerberg said during the Q3 earnings call. ‘’In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.’’
In addition to the global economic slowdown, other factors challenging Meta’s revenue include Apple’s App Tracking Transparency feature, rising competition from TikTok, and the billions of dollars it has spent on its metaverse project.
Last month, Meta shareholder Altimeter Capital Management sent an open letter to Zuckerberg saying that Meta needs to cut its workforce and reduce spending on the metaverse project.
Meta’s virtual reality and metaverse division Reality Labs saw a $3.7 billion loss during the third quarter, the company announced last month, adding that its costs will significantly grow year-over-year in 2023.
Twitter also laid off nearly half of its workforce last Friday, days after Elon Musk completed the $44 billion acquisition. However, the company is now asking some fired workers to come back according to sources familiar with the matter.