Meta META 2.11% Platforms Inc. plans to begin large-scale layoffs this week, according to people familiar with the matter, in what are among the largest rounds in a recent spate of tech job cuts following the industry’s rapid growth during the pandemic could .
The layoffs are expected to affect many thousands of employees and an announcement is planned as early as Wednesday, according to the population. Meta reported more than 87,000 employees at the end of September. Company officials have already told employees to cancel non-essential travel starting this week, the people said.
The planned layoffs would be the first major job cuts in the company’s 18-year history. Although a smaller percentage than last week’s cuts at Twitter Inc., which affected about half of that company’s employees, the number of meta employees expected to lose their jobs could be the largest yet at a major tech company in the US Be a year that has seen a cutback in the technology industry.
A Meta spokesperson declined to comment, citing Chief Executive Mark Zuckerberg’s recent statement that the company will “focus our investments on a small number of high-priority growth areas.”
“So that means some teams will grow significantly, but most other teams will be flat or shrink over the next year,” he said on the company’s third-quarter earnings call on Oct. 26, either roughly the same size or even a little smaller organization than we are today.”
The Wall Street Journal reported in September that Meta plans to cut spending by at least 10% in the coming months, in part through downsizing.
The cuts, which are expected to be announced this week, follow several months of more targeted downsizing where employees were spun off or their roles eliminated.
“Realistically, there’s probably a lot of people at the company who shouldn’t be here,” Mr. Zuckerberg told employees at a company-wide meeting in late June.
Meta, like other tech giants, went on a hiring spree during the pandemic as life and business shifted more online. It hired more than 27,000 people in 2020 and 2021 and added another 15,344 in the first nine months of this year — about a quarter of them in the most recent quarter.
Meta’s stock is down more than 70% this year. The company has flagged deteriorating macroeconomic trends, but investors have also been unsettled by high spending and threats to the company’s core business on social media. Growth for this business has stalled in many markets amid stiff competition from TikTok, and Apple Inc.’s requirement that users choose to track their devices has limited social media platforms’ ability to show ads to target.
Last month, investment firm Altimeter Capital said in an open letter to Mr. Zuckerberg that Meta should cut staff and scale back its Metaverse ambitions, reflecting growing dissatisfaction among shareholders.
Meta’s spending is also up sharply, causing free cash flow to fall 98% in its most recent quarter. Some of the company’s spending comes from heavy investments in additional processing power and artificial intelligence needed to further develop Reels, Meta’s TikTok-like short-form video platform on Instagram, and target ads with less data.
But much of Meta’s rising cost comes from Mr. Zuckerberg’s involvement with Reality Labs, a division of the company responsible for both virtual and augmented reality headsets, as well as creating the Metaverse. Mr. Zuckerberg has described the metaverse as a constellation of interlocking virtual worlds in which humans will eventually work, play, live, and shop.
The effort has cost the company $15 billion since the beginning of last year. But despite heavy investment in promoting virtual reality platform Horizon Worlds, users have been largely unimpressed. Last month, the Journal reported that Horizon Worlds’ attendance has fallen to well below 200,000 users over the year, about the size of Sioux Falls.
“I understand that a lot of people may not be comfortable with this investment,” Mr. Zuckerberg told analysts on the company’s earnings call last month, before restating his commitment. “I think people will look back on decades and talk about the importance of the work that has been done here.”
After the conference call, analysts downgraded their rating of Meta stock and lowered target prices.
“Management’s roadmap and rationale for this strategy continues to fail to resonate with investors,” analysts at RBC Capital Markets said in a statement last month.
Write to Jeff Horwitz at [email protected] and Salvador Rodriguez at [email protected]
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