Facebook parent Meta cuts an additional 10,000 employees
Tuesday, Mark Zuckerberg announced the company will lay off an additional 10,000 employees and will not fill 5,000 open positions. The move comes as part of Zuckerberg’s “Year of Efficiency,” during which he’s seeking to cut costs amid a slowdown in digital ad sales.
“Over the next couple of months, org leaders will announce restructuring plans focused on flattening our orgs, canceling lower priority projects, and reducing our hiring rates,” the CEO said in a statement posted to his Facebook page.
Shares of Meta were up more than 6% at the market open on Tuesday.
According to Zuckerberg, members of the company’s recruiting team will learn if they’ll be laid off by tomorrow. But tech team members won’t know the status of their jobs until April, while business group employees won’t find out until May. Some workers won’t be told if they’ll keep their jobs until the end of the year.
“At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,” Zuckerberg said. “Higher interest rates lead to the economy running leaner, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation. Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success.”
The CEO said he wants managers to take on up to 10 employees as their direct reports and is calling on workers to meet in person moving forward more often.
This marks the second round of layoffs for Meta in the last few months. The company previously cut 11,000 workers, about 13% of its workforce, last November. Meta, which changed its name from Facebook in 2021, has been stung by declines in digital ad spending, Apple’s (AAPL) privacy changes, and the complications of its expensive pivot to the metaverse.
That, coupled with the company’s huge hiring spree during the pandemic set the stage for today’s announcement. Meta, like other tech giants, staffed up heavily during the pandemic to meet the increased demand of consumers stuck inside for months. From Q4 2019 to Q3 2022, Meta grew its headcount by a staggering 93.5%.
But as restrictions ended, people went back to their normal lives rather than continuing to live as they did during lockdowns. And tech companies found themselves with far too many workers.
In its latest annual report, Meta said it had 86,428 employees, but that number included the majority of the first 11,000 jobs the company planned to cut. With the latest layoffs, Meta has reversed much of the hiring it did throughout 2022 and 2021, bringing staffing levels down to approximately 65,000 workers.
In a note to investors, Jefferies analyst Brent Thill wrote that the latest round of layoffs is necessary.
“We believe more headcount reductions are needed to offset the last 2 years of excess hiring,” he wrote on March 7. “Meta grew its headcount by 20% in ’22, which led to revenue per employee declining 21%. Hence, Meta’s reported plans to right size its headcount, laying off ‘thousands’ of employees are warranted.”
During Meta’s last earnings call, Zuckerberg emphasized the company’s need to cut costs and announced 2023 would be a “year of efficiency.”
The company, however, continues to plow billions of dollars into its metaverse efforts, rolling out new software and hardware to support what Zuckerberg sees as the firm’s future.
Meta’s Reality Labs segment lost $13.7 billion in 2022, up from the $10.1 billion it lost in 2021.
Shares of Meta are up 2% over the last 12 months but have jumped a whopping 59% since the start of the year.
The biggest tech companies in the U.S. are cutting costs elsewhere, too.
This month, Amazon paused construction on its second headquarters in Virginia following the biggest round of layoffs in the company’s history and its shifting plans around remote work.
This article was reported by Yahoo Finance.