Meta prepares for mass layoffs

This week Facebook (Meta) may initiate large-scale layoffs, according to a report in The Wall Street Journal. The choice is among the measures that will be put in place to recover the social giant’s accounts after a poor quarterly earnings report.

The books aren’t quite right: Meta opts for mass layoffs

Following the lousy results of Microsoft and Alphabet (Google), Mark Zuckerberg’s group, which also includes Instagram and WhatsApp just to name a few, posted worrisome results in the third quarter of the year with revenues falling sharply and profits down by half.

What the numbers have revealed puts the young entrepreneur and partners, who are losing faith in management’s choices, up against the wall; profits of $4.4 billion in Q3 compared to the $9.2 billion recorded in the same quarter in 2021 are an unmistakable sign that something needs to change.

Revenues have also dropped and stand at $27.7 billion compared to $29 billion last year.

“We are approaching 2023 by focusing on defining priorities and efficiency that will help us manage the current situation and emerge as an even stronger company.”

This was the New Yorker’s comment after the stock market results (-19%) on the same day as the data and -70% since January 2022 to five-year lows.

However, the recovery will be there according to the entrepreneur even if it does not appear clear now

“We face short-term challenges but we have the basis for a return to growth.”

Next year all operational and economic resources, management choices and technical implementations will be aimed solely and only on priorities and efficiency.

Zuk and co. do not want to abandon the work done on the metaverse and indeed want to continue with the launch convinced that in the long run this will be the best choice they can make despite the fact that the relative losses of Reality Labs responsible for designing the long-awaited Facebook metaverse are set to increase in 2023 due to the complexity of the work done.

The administrator revealed at the microphones of the conference with analysts:

“We are approaching 2023 by focusing on defining priorities and efficiency that will help us manage the current situation and emerge as an even stronger company.”

Sales, ratings and shares down

Bank of America, has cut the US giant’s credit rating and shares touch $105 far from the glories of the past for the sake of shareholders.

“We are struggling with some challenging dynamics, an unstable macroeconomy, growing competition, advertising losses and rising costs from our long-term investments, but our product trends look better than what some comments show. Our community continues to grow. Even if we face revenue challenges in the short term, the fundamentals point to the return of strong growth.”

The current quarter recorded 1.98 billion daily active users, the figure is up 3% compared to the same period in 2021, and monthly active users also increased touching 2.96 billion at +2% year-on-year.

The metaverse worries shareholders since much of the capital spent by the company is going in this direction, which at the moment is not paying off at all just as Reality Labs is making big losses.

Revenue in the metaverse has nearly halved year-over-year to $285 million, which according to Dave Wehner, Meta’s chief financial officer is due more to lower than expected sales of Quest 2.

“We expect Reality Labs ‘operating losses in 2023 to increase significantly year after year, so we intend to accelerate Reality Labs’ investments so that we can achieve our goal of increasing the company’s overall operating income over the long term.”

Zuckerberg reassured:

“Many of the things we’re working on across the whole family of apps will work and be fine. It is not possible to define at this moment how impactful it will be, every improvement is somehow going in the right direction. Obviously the metaverse is a set of long-term endeavors that we are working on and that too will eventually work. Long-term investments in the metaverse will provide greater returns over time. I think we will overcome each of these challenges in different time periods. I appreciate your patience and believe that those who are patient and invest with us will eventually be rewarded.”

On Wednesday, 9 November, the much-feared layoffs, which insiders say are expected to affect thousands of people, are expected to be announced.

Meta is a company that provides employment for more than 87,000 people, and insiders assure that dictates have already come from management plans to cancel possible furloughs in the short term in anticipation of impending decisions, a less than reassuring signal that suggests that at least in the short term the tech giant’s accounts will be put on the backs of employees.

The 38-year-old founder of the social network regarding the staff engaged in the company expressed himself in these terms:

“Realistically, there are probably a few people in the company who shouldn’t be here.”

In other words, social ads on Instagram and Facebook at the moment are stagnating due to lower usage by users, and it was decided to buffer this by downsizing staff at least in the immediate term.

This will allow the company involved in programming the metaverse to continue its work and this path according to Zuckerberg will eventually lead to success and quarters worthy of the past.

Meanwhile, as opted by Elon Musk following the recent acquisition of the social network Twitter, Zuckerberg also chooses the path of layoffs at a time when (meager consolation) labor data in the US are very good and portray a dynamic world both inbound and outbound and salaries up 4%.