plans to begin large-scale layoffs this week, according to people familiar with the matter, in what could be one of the biggest rounds in a recent string of tech job cuts after the industry’s rapid growth. industry during the pandemic.
The layoffs are expected to affect several thousand employees and an announcement is expected as early as Wednesday, the people say. 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 workforce reductions to occur in the company’s 18-year history. Although smaller in percentage terms than the cuts at Twitter Inc. last week, which affected about half of that company’s staff, the number of Meta employees set to lose their jobs could be the largest yet in a big tech company in a year. which has seen a downturn in the tech industry.
A spokesperson for Meta declined to comment, referring to Chief Executive Mark Zuckerberg’s recent statement that the company would “focus its investments on a small number of high-priority growth areas.”
“So that means some teams will grow significantly, but most of the other teams will be flat or shrink over the next year,” he said on the company’s third-quarter earnings call. company on October 26. “Overall, we plan to end 2023 as either roughly the same size or even a slightly 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 staff cuts.
The cuts expected to be announced this week follow several months of more targeted downsizing in which employees have been managed or had their positions cut.
“In reality, there’s probably a bunch of people in the company who shouldn’t be here,” Zuckerberg told employees at a company-wide meeting in late June.
Meta, like other tech giants, launched a hiring spree during the pandemic as life and business moved more online. It added more than 27,000 employees in 2020 and 2021, and another 15,344 in the first nine months of this year, about a quarter of that last quarter.
Meta’s stock has fallen more than 70% this year. The company highlighted deteriorating macro trends, but investors were also spooked by its high spending and threats to its core social media business. This company’s growth in many markets has stalled amid fierce competition from TikTok and Apple Inc.
The requirement that users opt in to tracking their devices has reduced the ability of social media platforms to target ads.
Investment firm Altimeter Capital said in an open letter to Mr. Zuckerberg last month that Meta should downsize its workforce and lower its metaverse ambitions, reflecting growing shareholder discontent.
Meta’s expenses also rose sharply, causing its free cash flow to drop 98% in the last quarter. Some of the company’s expenses stem from significant investments in the additional computing power and artificial intelligence needed to further develop Reels, Meta’s TikTok-like shorthand video platform on Instagram, and to target ads with less. of data.
But much of Meta’s inflated costs stem from Mr. Zuckerberg’s commitment to Reality Labs, a division of the company responsible for virtual and augmented reality headsets as well as the creation of the Metaverse. Mr. Zuckerberg presented the metaverse as a constellation of interlocking virtual worlds in which people will work, play, live and shop.
The effort has cost the company $15 billion since the start of last year. But despite heavy investment in promoting its virtual reality platform, Horizon Worlds, users have been largely impressed. Last month, the Journal reported that Horizon Worlds visitors had dropped over the year to well under 200,000 users, about the size of Sioux Falls.
“I understand that a lot of people might disagree with this investment,” Zuckerberg told analysts during the company’s earnings call last month before reaffirming his commitment. “I think people are going to look back decades and talk about the importance of the work that was done here.”
Following the call, analysts lowered their rating for Meta shares and reduced price targets.
“Management’s track record and rationale for this strategy continues to fail to resonate with investors,” RBC Capital Markets analysts said in a note last month.
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