Report: Meta Preparing Large-Scale Layoffs

Following a second straight quarter of revenue loss and a 70% loss in stock value on the year, Facebook parent company Meta is reportedly planning to lay off thousands of employees in what's expected to be the largest mass layoffs to hit the tech sector.

Report: Meta Preparing Large-Scale Layoffs
Image credit: AP [via The Wall Street Journal]

Facts

  • Following a second straight quarter of revenue loss and a 70% loss in stock value on the year, Facebook parent company Meta is reportedly planning to lay off thousands of employees in what's expected to be the largest mass layoffs to hit the tech sector.
  • Meta reported 87k employees in September, having hired a combined 27k in 2020 and 2021 due to the pandemic-induced shift to online life, and another more than 15k so far this year.
  • With slowed economic growth and rising interest rates forcing digital advertisers to cut back and making it more expensive to borrow, CEO Mark Zuckerberg said Meta will focus investments on a small number of "high priority growth areas" while other teams will "stay flat or shrink over the next year."
  • The company's free cash flow declined 98% in the last quarter due to investments in its Reels — its short-form video platform on Instagram — and its Reality Labs, the division responsible for creating VR headsets and the Metaverse.
  • With the mass layoffs reportedly beginning as soon as Wednesday, the move would be the first major staff reduction in the company's 18-year history.
  • The news comes after several more targeted cuts last month, in which employees were managed out or saw their roles eliminated. While, on a percentage basis, it likely won't be close to Twitter's recent approximate 50% staff cut, Meta's upcoming layoffs could be the largest overall staff reduction of any tech company this year.

Sources: Washington Examiner, Wall Street Journal, and VOA.

Narratives

  • Pro-establishment narrative, as provided by Business Insider. This is the unfortunate reality for the tech industry when the economy takes a downturn. With inflation and interest rates up, investment and revenue are down, which means companies need to cut off some of the excess expenses, like employees. To keep investors happy, both start-ups and massive platforms like Meta need to ensure they hit certain market goals.
  • Establishment-critical narrative, as provided by Quartz. Meta's financial problems aren't only from inflation but also the $9B already lost due to Zuckerberg's obsession with VR goggles and the metaverse. The irony is that while looking to mass-fire employees throughout the company, Zuckerberg doesn't seem to be reining in his metaverse ambitions. Only time will tell, but these layoffs won't do much good if no one wants to join Meta's virtual world.

Predictions