It is the largest job cut in the company’s history. CEO Zuckerberg also points to his own mistakes. / Facebook Meta is laying off 11,000 employees
Now it’s official: there are mass layoffs at the Facebook group Meta. More than 11,000 employees are to be made redundant. That’s about 13 percent of the workforce, said CEO Mark Zuckerberg today.
He pointed out that he overestimated the online boom at the beginning of the corona pandemic and therefore increased investments. But now the online business has returned to earlier trends – and the weakening economy and increased competition are also having a negative impact on revenues. He takes responsibility for the decisions and their consequences.
Metaverse is a capital killer
Meta is faced with the problem that its core business of advertising on online services such as Facebook and Instagram is currently making less money than before. In the face of high inflation and concerns about the economy, advertisers are putting the brakes on costs and spending less money on online ads.
At the same time, the development of virtual worlds promoted by founder and boss Mark Zuckerberg under the keyword Metaverse is eating up more and more money. Zuckerberg had recently announced that the number of employees at Meta could no longer grow for the time being and could also shrink in the coming year because the group would concentrate on fewer areas.
Since the beginning of the year, the Reality Labs division, which is working on the Metaverse, has accumulated a deficit of $9.4 billion – with sales of just $1.4 billion in this area. Zuckerberg has already announced that Reality Labs’ losses will “grow significantly” in the coming year.
Meta stock jumps up
The group’s problems are also reflected in the most recent quarterly report: In the past third quarter, Meta’s revenues fell by four percent year-on-year to $27.7 billion. The bottom line is that profits fell by 52 percent to around 4.4 billion dollars.
In pre-market US trading, the Meta share reacted to the job cuts that have now been announced with a jump in price of more than four percent. But with a view to the long-term price development of the paper, that’s just a drop in the bucket: Within a year alone, the Meta share has lost more than 70 percent of its value.
“The market right now is applauding that Meta is shedding more jobs, but the downside is that the numbers aren’t right, they’re not great,” said Ken Mahoney, chief executive of wealth manager Mahoney Asset Management.