The parent company of Facebook, whose stock has lost more than two-thirds of its value, has announced intentions to reduce discretionary expenditure and prolong its hiring freeze through the first quarter.
As the Facebook parent company confronts rising expenses and a poor advertising market, Meta Platforms Inc. said on Wednesday that it will lay off 13% of its workforce, or more than 11,000 workers, in one of the largest technology layoffs this year.
The huge employment cuts, the first in Meta’s 18-year existence, come in the wake of tens of thousands of layoffs at other top internet firms including Twitter, owned by Elon Musk, and Microsoft Corp.
In the face of decades-high inflation and swiftly increasing interest rates, the economic boom that increased the value of IT businesses this year has collapsed.
More than two-thirds of the value of Meta’s shares have been destroyed, and the company stated it also intends to reduce discretionary expenditure and continue its hiring freeze through the first quarter.
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” the company’s founder Mark Zuckerberg said in a message to employees announcing the layoffs.
“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.”
Potential recession
The company’s problems have been exacerbated by the economic downturn and the bleak forecast for internet advertising, which is by far Meta’s greatest source of income. This past summer, Meta recorded its first-ever quarterly sales decrease, which was followed by a larger decline in the following season.
While some of the suffering is special to the firm, other parts are related to more general economic and technical causes.
As part of a tumultuous reorganization when Musk became leadership, Twitter fired roughly half of its 7,500 staff last week. In a tweet, he stated that job cuts were necessary “when the firm is losing more than $4M/day,” although he made no mention of the losses themselves.
As it switches its attention away from social media, Meta has alarmed investors by investing more than $10 billion annually in the “metaverse.”
