Meta has announced that it will lay off 11,000 employees or about 13 percent of the company’s total workforce. CEO Mark Zuckerberg announced the news in a blog postand said he was guilty of being too optimistic about the company’s future growth based on a pandemic wave.
“At the onset of Covid, the world was rapidly going online and the wave of e-commerce led to exorbitant revenue growth,” Zuckerberg said. “Many people predicted that this would be a permanent acceleration that would continue even after the pandemic was over. So did I, so I made the decision to significantly increase our investments. Unfortunately, this did not go as I expected.”
The layoffs are the first major job loss since Meta was founded in 2004
Zuckerberg said the company would now become “leaner and more efficient” by cutting spending and staffing, shifting more resources to “a smaller number of high-priority growth areas,” including advertising, AI and the metaverse. Zuckerberg said the company’s recruiting team would be particularly “disproportionately affected” by the cuts. Meta reported some 87,000 employees in September, with today’s layoffs being the first major cutbacks since the company was founded in 2004.
Why was Meta hit so hard? Well, an expected downturn in the US economy has dampened momentum for many tech stocks, but the company’s prospects have also been impacted by both strong competition from rivals and quirky strategy.
Meta’s shares fell 70 percent this year, but rose in response to today’s job cuts
As the bad news piled up, Meta’s stockpile has collapsed. Its share price has fallen more than 70 percent this year and it has lost $700 billion in market value in… recent weeks. However, after Zuckerberg’s announcement of the job cuts, the company’s stock price rose more than four percent in pre-market trading.
In the blog post announcing Meta’s cuts, Zuckeberg said laid-off workers in the U.S. would receive 16 weeks of base pay plus two additional weeks for each year of service, six-month health insurance, and support for finding a new career and navigating through life. immigration problems. Zuckerberg said the company is instituting a hiring freeze through the first quarter of 2023, “with a small number of exceptions.”
The Meta CEO ended his note to employees with a message seemingly aimed at outside observers, including those skeptical of the company’s pressure in the metaverse.
“I believe we are deeply underestimated as a company today,” Zuckerberg wrote. “Billions of people use our services to connect, and our communities continue to grow. Our core businesses are among the most profitable ever built with huge potential ahead of us. And we are at the forefront of developing the technology to shape the future of social connection and the next computing platform.”