Facebook plans to begin large-scale layoffs this week that will affect thousands of employees. An announcement is already planned for Wednesday.
Facebook parent Meta Platforms Inc forecast a weak holiday quarter and significantly higher costs next year, which would take away about $67 billion from Meta’s market value, adding to more than half a trillion in values already lost this year US dollars added.
The disappointing outlook comes as Meta grapples with slowing global economic growth, competition from TikTok, privacy changes from Apple, concerns about massive spending on the Metaverse, and the ever-present threat of regulation.
The upcoming layoffs were first reported in the Wall Street Journal.
Chief Executive Mark Zuckerberg said he expects the Metaverse investments to take about a decade to bear fruit.
In the meantime, he’s had to freeze hiring, close projects, and reorganize teams to cut costs.
Facebook plans to begin large-scale layoffs this week that will affect thousands of employees. An announcement is already planned for Wednesday. Facebook CEO Mark Zuckerberg plans to fire up to 12,000 underperforming Facebook employees
Meta’s stock price has continued to plummet since early 2022, down 73 percent
Meta Platforms Inc. was named the worst performer in the S&P500 as its shares continue to fall amid concerns about the development of its costly virtual world – the Metaverse
Meta shareholder Altimeter Capital Management has asked Mark Zuckerberg to reduce the company’s workforce by 20 percent and reduce investments in Metaverse by 50 percent. Zuckerberg (above) has aggressively poured billions of dollars into the company’s VR projects
“In 2023, we 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 stagnate or shrink over the next year. Overall, we expect to end 2023 at either roughly the same size or even a slightly smaller organization than today,” Zuckerberg said on the last earnings call in late October.
The social media company had cut its plans to hire engineers by at least 30% in June, with Zuckerberg warning employees to prepare for an economic downturn.
Meta’s shareholder Altimeter Capital Management had previously said in an open letter to Mark Zuckerberg that the company needs to streamline by cutting jobs and investments, adding that Meta lost investor confidence as it increased spending and Metaverse switched.
The push to cut thousands of jobs comes after reports that Meta wanted to cut 12,000 employees from the company. Pictured: employees at Meta’s Silicon Valley office in Menlo Park
According to Altimeter, annual free cash flow can double to $40 billion if Zuckerberg cuts 17,000 jobs, cuts capital expenditures by at least $5 billion to $25 billion per year, and increases Metaverse annual investments to $5 billion instead of the currently capped at $10 billion.
“Meta needs to rebuild trust with investors, employees and the tech community to attract, inspire and retain the best people in the world,” Altimeter CEO Brad Gerstner wrote in the letter. “In short, meta needs to get fit and focused.”
Several tech companies, including Microsoft, Twitter and Snap, have cut jobs and scaled back hiring in recent months as global economic growth slows amid higher interest rates, rising inflation and an energy crisis in Europe.
Meta has spent billions and hired thousands of people around the world to build the Metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic.
But the company’s dreams have fallen short as the Reality Labs unit that works on augmented and virtual reality has consistently reported staggering losses. It lost $5.8 billion in the first six months of the year.
Altimeter said such huge investments “into an unknown future are outrageous and daunting, even by Silicon Valley standards.”
A report from the WSJ last month said that Metaverse is more than 300,000 users short of its year-end goal, even as Zuckerberg has invested billions and hired hundreds for the company
Zuckerberg has repeatedly defended his decision to invest heavily in Metaverse
A little less than a year since Zuckerberg rebranded Facebook to Meta, internal documents obtained earlier this month revealed that his Metaverse virtual reality universe is struggling to meet its goals.
This is according to documents seen by the Wall Street Journal. The company planned to reach 500,000 users of its virtual reality platform Horizon Worlds by the end of 2022. The number is below 200,000 at the time of writing, still well below the revised target of 280,000 by the end of 2022.
The documents also show that the majority of those 200,000 users do not come back after entering the system once, with many complaining that most areas are devoid of other users.
They’ve also complained about avatars floating around eerily without legs – an issue Meta says it will fix in the coming months.
The number of Horizon Worlds users has been declining since spring 2022.
Less than ten percent of the worlds in the Metaverse receive more than 50 visitors, and the majority of these worlds receive zero visitors.
Zuckerberg has claimed that the Metaverse is the future, despite several negative reviews about how its virtual world looks and works