The parent company of Facebook will lay off more than 11,000 workers, CEO Mark Zuckerberg informed workers Wednesday.
As of the end of September, 87,314 people worked for Meta, which is the parent of Facebook, Instagram and WhatsApp, according to The New York Times.
Meta’s stock is down about 70 percent this year amid lackluster earnings. Meta’s stock ticked upward after word of the layoffs emerged.
“The market is breathing a sigh of relief that Meta’s management, or Zuckerberg specifically, seems to be heeding some advice, which is you need to take some of the steam out of the growing expenditure bill,” Hargreaves Lansdown analyst Sophie Lund-Yates said, according to Reuters.
However, she said, “It does not quite tally that you’re going to try and increase efficiency at the same time as chasing something as ambitious and as tenuous as the metaverse.”
Zuckerberg explained the situation in a public letter to employees.
“Today, I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13 percent and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1,” he wrote.
“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,” he wrote.
Zuckerberg said he misread the online surge that was part of COVID-19 lockdowns.
“At the start of COVID, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments,” he wrote.
“Unfortunately, this did not play out the way I expected. 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. I got this wrong, and I take responsibility for that,” he wrote.
Noting that “[t]here is no good way to do a layoff,” Zuckerberg wrote that employees would be notified by email if they were losing their jobs, adding that employees would get a severance package including at least 16 weeks of their pay and six months of health insurance. Employees losing their jobs would be cut off from most computer systems except email, he wrote, “so everyone can say farewell.”
“These cycles of boom and bust are incredibly destructive within organizations because people employed there feel like they don’t know where they stand,” said Sandra Sucher, a management professor at Harvard, noting that Meta’s rapid expansion all but set the stage for the layoffs.
Meta is not alone in making cuts, according to CNN.
In addition to Twitter’s proposed cut of about 3,700 jobs, Lyft has said it will cut 13 percent of its workers while Stripe said its layoffs would hit 14 percent. Amazon has said it is freezing all hiring.
Zuckerberg’s investments in the metaverse, a world of virtual reality and technology not yet developed, have dogged the company.
Reality Labs, the part of Meta where metaverse research and development is taking place, lost $3.67 billion in the third quarter of this year, according to Reuters.
Meta shareholder Altimeter Capital Management, a technology-focused hedge fund, has called for cutting metaverse investments in half from the current level of $10 billion.
Altimeter said such huge investments “in an unknown future is super-sized and terrifying, even by Silicon Valley standards,” according to Reuters.
This article appeared originally on The Western Journal.
