Facebook chief Mark Zuckerberg to fire ‘10% of Meta’s 87,000 staff’ this week in first mass layoffs in company’s history, analyst warns – after profits slump and $80bn wiped off value
- Cutting headcount by 10% would mean around 8,700 Meta staff losing their jobs
- Prediction follows news company planning first ‘large-scale layoffs’ in its history
- Gene Munster, a managing partner at Loup, said cuts at Meta ‘totally necessary’
- But Zuckerberg is likely to expand struggling Metaverse department next year
Mark Zuckerberg will lay off 10 percent of Meta’s staff this week as the company embarks on the first mass job cuts in its 18-year history, an analyst has predicted.
The Facebook founder, 38, is planning ‘large-scale’ job losses that could total around 8,700 employees after the company’s profits slumped and nearly $80billion was wiped from their value.
Analyst Gene Munster, a managing partner at Loup, which invests in Meta, said the staff cuts would be the largest by any of the big tech companies.
Details of Meta’s plans come after Twitter’s new chief, Elon Musk, brutally released half of its staff, about 3,750 employees – becoming the latest tech firm to wield the axe.
Meta, which owns Facebook, Instagram and WhatsApp, has around 87,000 employees – so cuts of 10 percent would amount to more than double the headcount lost by Twitter.
Analyst Gene Munster predicts Meta will lay off 10 percent of staff but said cuts are ‘necessary’
Meta CEO Mark Zuckerberg is planning ‘large-scale layoffs’ – the first in the company’s history
Munster said the layoffs are ‘totally necessary’.
But he said Meta is actually likely to hire thousands more employees next year as it continues to throw resources at its struggling Metaverse unit, named Reality Labs.
Munster told Squawk Box on CNBC: ‘In this case, he’s probably going to cut – they haven’t given the specific numbers – 10 percent, which will be the largest headcount of any of the big tech companies.’
Munster said Meta’s decision was ‘a step in the right direction’.
The company’s stock was up more than five percent on Monday morning following news of the cuts.
But it’s still a staggering 71.5 percent lower than at the beginning of 2022.
Meta’s stock price jumped slightly on news of the cuts – but it’s still down 71 percent this year
Zuckerberg has thrown billions into his Metaverse project, but it’s struggling to draw in users
‘In some ways, I’m a little bit surprised to see the stock reaction given Zuckerberg talked about this on their earnings call a couple weeks ago,’ Munster added.
‘Specifically, he said head-count would effectively remain flat a year from now, so what’s essentially going on is they are reducing headcount by 10 percent and they will be adding headcount within the Metaverse.
‘I think when you put all this together, it’s some welcome relief for Meta investors.’
He said: ‘It’s good that they are showing some fiscal responsibility, but still, the future of Meta is going to be largely dependent on the Metaverse – what direction that moves in.’
Investors want to see headcount reducing in 2024, he said.
It is not clear how Meta staff will be told who’ll be let go, but Zuckerberg is known for holding company-wide calls to make important announcements.
Twitter boss Elon Musk used brutal tactics to axe half of its staff, locking them out of their offices and laptops, then informing workers by email.
Zuckerberg will want to avoid the backlash faced by Elon Musk over his brutal Twitter layoffs
Munster said Meta will lay off 10 percent of its staff, the most of any tech firm by headcount
The strategy drew fierce criticism from both staff and observers – and Zuckerberg will likely want to avoid a similar backlash when he announces his cuts.
Along with economic uncertainty in the near future, Meta’s struggles have partly been down to the lukewarm reception of its flagship Metaverse project.
Meta has spent billions and hired thousands of employees around the world to build the Metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic.
But the company’s dreams have fallen short as the Reality Labs unit, which works on augmented and virtual reality, has continuously reported staggering losses.
It lost $5.8billion in the first six months of the year.
THE FACEBOOK ‘METAVERSE’: A VIRTUAL WORLD WITHIN A WORLD
Mark Zuckerberg has said he wants people to think of Facebook not as a social media company, but a ‘metaverse’ company.
That is one that is akin to a virtual environment where people can work and play for most of their 24 hours without leaving their home.
‘And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company,’ Zuckerberg said in a 2021 interview with The Verge.
‘And obviously, all of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators.
‘But this is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.’
So what exactly is the metaverse?
As Zuckerberg describes it, it’s a ‘vision’ that spans the entire tech industry, calling it the successor to the mobile internet.
‘But you can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it,’ he continued.
‘And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage, like dancing, for example, or different types of fitness.’
The Facebook CEO says his vision – which he has been working on for several months – would not only reach into virtual reality, but augmented reality, computers, mobile devices and game consoles as well.
Zuckerberg has said it will take several years to realize the full potential of the Metaverse.
Meta Platforms Inc forecast a weak holiday quarter and significantly more costs next year wiping about $67 billion off Meta’s stock market value, adding to the more than half a trillion dollars in value already lost this year.
The disappointing outlook comes as Meta is contending with slowing global economic growth, competition from TikTok, privacy changes from Apple, concerns about massive spending on the metaverse and the ever-present threat of regulation.
The impending layoffs were first reported in the Wall Street Journal.
Zuckerberg said on the last earnings call in late October: ‘In 2023, we’re going to focus our investments on a small number of high priority growth areas.
‘So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year.’
‘In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.’
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