Massive layoffs at Meta Platforms Inc. began Wednesday, offering a slight boost to the social-media company’s beaten-down stock.
Chief Executive Mark Zuckerberg told employees that he planned to lay off more than 11,000 employees, or about 13% of the company’s workforce, according to a post shared to the company’s public newsroom Wednesday morning.
Like other tech-industry executives who have announced layoffs in recent weeks and months, Zuckerberg admitted to growing Meta
too quickly amid predictions that pandemic-fueled tailwinds would sustain.
“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” he said. “I got this wrong, and I take responsibility for that.”
Shares of the Facebook parent company were up about 4% in premarket action.
Zuckerberg noted in the blog post that the cuts will affect “every organization across both Family of Apps and Reality Labs,” though “some teams will be affected more than others.” He gave the example of recruiting, which “will be disproportionately affected since we’re planning to hire fewer people next year.”
The layoffs, the first wide-scale job cuts of the company’s 18-year history, are the latest manifestation of an industry grappling with slower growth amid a pullback in digital advertising, hand-wringing over the economy and rising inflation.
Meta, in particular, has felt the sting as it fends off intensifying competition for advertising dollars and users from younger rivals such as TikTok while at the same time contending with new privacy restrictions from long-time nemesis Apple Inc.
that makes it harder for app makers like Meta to track user activity across the internet without their permission. Former Meta Chief Financial Officer David Wehner has pegged the hit on potential advertising revenue at more than $10 billion.
During Meta’s quarterly earnings call in October, Zuckerberg said the company expected to conclude 2023 “either roughly the same size, or even a slightly smaller organization than we are today.”
In October, Meta reported its second-ever year-over-year revenue decline while the company’s earnings plunged in half, and executives cautioned that they intend for continued spending as they push more deeply into plans for the metaverse. Meta has already poured billions of dollars into Zuckerberg’s long-term dream, which is housed in the Reality Labs section of the company’s financials.
“We continue to anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” Meta executives said in a filing with the Securities and Exchange Commission that went out Wednesday morning.
Meta’s management did pull down the company’s overall expense forecast somewhat, but the numbers are still staggering. Executives now forecast 2023 expenses of $94 billion to $100 billion, whereas their prior guidance was for $96 billion to $101 billion.
“The updated range reflects our plan to add fewer employees in 2023 than we previously expected as we are significantly slowing our hiring trajectory through the beginning of 2023,” executives said in the filing.
Meta’s hemorrhaging is the latest to whipsaw a tech sector battered by a wave of layoffs and hiring freezes in recent weeks. Companies across various swaths of tech are scrambling to cut costs under threat of a recession following hiring binges during the pandemic.
Zillow Group Inc.
Stripe Inc., and Chime Financial Inc. are among the names that have announced job cuts, while Apple and Amazon.com Inc.
reportedly ordered job freezes.
Meta’s dilemma is especially confounding for investors because the company is shifting its focus, and resources, to the metaverse — a major bet since many analysts see mainstream metaverse adoption at least several years away, if that.