It seems Meta is the latest company affected by this fall’s tech sector employment crunch. The recent macroeconomic slowdown hasn’t been good for Meta, but the company’s heavy investment in the Metaverse hasn’t helped its profits and stock price either.
Sources have told The Wall Street Journal that Meta will start massive layoffs as soon as Wednesday. Thousands of employees could lose their jobs in the largest-ever headcount reduction for a major tech company.
Meta hired tens of thousands of employees over the last three years. This week’s broad reductions — the first in Meta’s history — may be a sign that it grew too quickly.
A Meta spokesperson declined to comment, pointing back to Mark Zuckerberg’s comments during a late October Q3 earnings call. Zuckerberg tried to downplay the size of the layoffs, saying some teams within Meta will grow or shrink, leaving the company the same size or somewhat smaller by the end of 2023.
Towards the end of October, Meta reported Q3 income and revenue down by billions along with over half a trillion dollars in lost market value over the last year. The company’s stock has also plummeted since last September. Many blame the trouble on Meta’s investments in Metaverse division Reality Labs, which has bled billions throughout 2021 and 2022.
Zuckerberg believes wholeheartedly that the Metaverse is the future, renaming his company after it. Others, however, think that most Metaverse business endeavors will close within a few years.
Even if the company’s VR/AR ambitions are dragging it down, Meta isn’t alone in this fall’s belt-tightening trend. Amazon announced a hiring freeze last week, blaming macroeconomic turbulence.
Also last week, new Twitter owner Elon Musk parted ways with half the company’s staff in a bid to cut costs against the debt he saddled Twitter with after buying the company for $44 billion. However, failing to give employees the legally-required advance notice triggered a class-action lawsuit. Twitter may even have to re-hire some workers either because they were laid off by mistake, or the company now realizes their importance.
Job squeezes at all these companies come against the backdrop of a general post-pandemic hangover in multiple tech sectors. Customer enthusiasm for PC components, tablets, phones, and Chromebooks has fallen recently, as many fear a looming recession.