Key Takeaways:
- Meta is letting go of 13 percent of its workforce.
- Zuckerberg blames macroeconomic downturn, increased competition, others for layoffs.
LAGOS (CoinChapter.com) — Facebook’s parent company Meta is the latest company to implement job cuts as the company layoff more than 11,000 employees, reducing its workforce by around 13%.
In detail, Meta CEO Mark Zuckerberg on Wednesday announced the layoffs, indicating that the company will also continue to hold on hiring till further notice. It is worth noting that this is Meta’s biggest round of job cuts in the history of the company.
Zuckerberg in the announcement apologized to Meta workers affected by the job cut. He admitted that he got it wrong, noting that he will take responsibility for the problems caused by the cuts. He also explained that the company would be focusing its investment on a number of high-priority growth areas.
“We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.” Zuckerberg said.
Meta layoffs come a few days after Elon Musk-led Twitter sacked around 50 percent of its employees globally to reduce costs.
How Zuckerberg’s Facebook Got Here
On how the company came to this point, Zuckerberg explained that during the pandemic, the world rapidly moved online and many people projected that this acceleration would continue even after the pandemic ended.
He pointed out that the company overestimated the online boom at the beginning of the pandemic. According to him, this did not play out the way he expected. He said, “Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused revenue to drop.”
Meta which also owns photo messaging app Instagram began downsizing after the economic downturn hit in the second half of the year. Recall that Meta in July posted its first quarterly revenue decline in history. The social media company also recorded another major decline in October.
Moreover, rising inflation and economic recession have been taking a toll on the tech industry. In addition, stronger competition from other social platforms like TikTok and Twitch has also impacted Meta’s revenue negatively.
In fact, due to the economic challenges Meta had earlier announced plans to cut its engineers by at least 30%. In September, the company announced a pause in hiring and a subsequent restructuring with Mark Zuckerberg hinting at further downsizing.
Meta Stock Price Soars 5% Today
Meanwhile, Meta shares soared following the announcement of the job cuts. Meta stock on the day rallied more than 5% after the announcement and currently stands at $103.
This surge was unprecedented as NASDAQ: META price was down by almost 75% this year. The drop represents Meta’s lowest drop since early 2016. The social media giant is also currently the worst performer in the S&P 500 in 2022.
However, following the job cut Meta’s stock five days performance rose by over 15%. Additionally, the company says it would pay 16 weeks of base pay plus two additional weeks for every year of service as a part of the severance package and all remaining paid time off.
