Thursday, March 28, 2024

Mark Zuckerberg Announces Staff Layoffs at Meta

META
Smartphone display with logo of Facebook, WhatsApp and Instagram apps in hand against blurred META logotype on white monitor background: Tallinn, Estonia – October 29, 2021

*Meta Platforms (META), the parent company of Facebook, Instagram and WhatsApp, has reportedly seen its market capitalization for this year fall by nearly $545 billion.

In the third quarter, shares fell 15%, translating into a loss of $57.5 billion in market value, reported by MSN.

Chief Executive Mark Zuckerberg, warned at the end of June that the popular social media platforms were headed for “one of the worst downturns that we’ve seen in recent history.”

Zuckerberg reportedly told employees that the workforce will be cut for the first time since the company was founded in 2004. 

READ MORE: Facebook Allegedly Examines How Platform Discriminates Against Black Users

 Mark Zuckerberg
Facebook CEO Mark Zuckerberg

“I had hoped the economy would have more clearly stabilized by now,” Zuckerberg said, according to Bloomberg. “But from what we’re seeing, it doesn’t yet seem like it has, so we want to plan somewhat conservatively.”

Zuckerberg reportedly envisions Meta to operate “somewhat smaller” by the end of 2023. Meta intends to freeze hiring, restructure some teams and reduce budgets for other teams.  

“Our plan is to steadily reduce headcount growth over the next year. Many teams are going to shrink so we can shift energy to other areas, and I wanted to give our leaders the ability to decide within their teams where to double down, where to backfill attrition, and where to restructure teams while minimizing thrash to the long term initiatives,” Zuckerberg told analysts during the second-quarter-earnings call in July.

One industry analyst explained some of the challenges facing Meta.

“So you have an ad slowdown, which is the first thing that companies cut when there’s an economic headwinds. I think the second component is competition. Obviously, there’s been a stampede to TikTok,” said Brent Thill at Jefferies.

He continued: “Very few 18 to 25-year-olds are still on Facebook, they stampeded over to TikTok. So I think you have a competitive issue as well. In the interim you have revenue stolen, you have big investments going into the metaverse, you have operating margins coming down, and then you have the combined effect of no interest in buying technology right now.”

Thill added, “Obviously a stall on hiring is suggesting things are getting worse, not better. So growth is gonna go negative this quarter. Last quarter was negative, it could get even more extreme as we go into this economic storm.”

“So there’s really not a lot of light until we get into 2023,” Thill said.

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