With the economy wobbling on the brink of recession, Meta Platforms Inc announced its plans to lay off 11,000 jobs, or 13% of its workforce, in one of the year’s biggest layoffs.
Meta had 87,314 employees as of the end of September.
The move--- the first and drastic one---in Facebook parent’s 18-year history came amid its struggle to contain soaring costs from its push into the metaverse amid a weak advertising market.
With this, Meta has joined several other major tech companies that went for thousands of job cuts. These firms include Elon Musk-owned Twitter and Microsoft Corp.
CEO Mark Zuckerberg termed the layoffs “some of the most difficult changes we’ve made in Meta’s history.” He noted that all employees will soon get an email “letting you know what this layoff means for you.”
The pandemic-led bubble that boosted tech giants and their valuations have turned into a bust this year due to decades-high inflation and rapidly rising interest rates.
“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Chief Executive Officer Mark Zuckerberg said in a message to employees.
He owned up for the loss and said, “I got this wrong, and I take responsibility for that.”
The company also extended its hiring freeze through the first quarter.
A struggling Meta’s stock has plunged 71% this year and it is taking steps to cut costs following several quarters of disappointing earnings and a drop in revenue.
The firings, the company's most drastic since the founding of Facebook in 2004, reflect a sharp slowdown in the digital advertising market, and Zuckerberg's multibillion-dollar investment in a speculative virtual-reality push called the metaverse.
Shares rose about 3.5% in premarket trading on Wednesday before markets opened in New York.
Experts in Wall Street expressed concern over Zuckerberg’s metaverse investment terming it “super-sized and terrifying”.
Meta, which will pay 16 weeks of base pay and two additional weeks for every year of service, as well as all remaining paid time off as part of the severance package, did not disclose the exact charge for the layoffs.
Sacked employees will also receive their shares and healthcare coverage for six months, according to Meta.