Meta in hot water amid dropping stocks, as users flee, sales plunge
In a series of budget and position cuts, Zuckerberg announces that he's "not adding people to teams where we don't expect to have roles next year."
Meta Platforms Inc. CEO Mark Zuckerberg announced the first major budget cut since the founding of the social media platform Facebook in 2004, in a campaign of reshuffling teams and reducing staff for the first time ever, which leads to an end to the rapid growth of the company.
During a weekly Q&A session with employees, Zuckerberg stated that Meta will eventually be smaller in 2023 as opposed to this year, as he intends to halt recruitment, cut down on expenses and realign priorities, according to a person who attended the session.
Meta's reduction of budgets, per a revision by Bloomberg, indicates that vacant positions left by departing employees would not be filled and those who are not "succeeding" may be let go, with the CEO adding, “I had hoped the economy would have more clearly stabilized by now... But from what we're seeing it doesn't yet seem like it has, so we want to plan somewhat conservatively.”
The package of reorganizing also included the postponing of providing full-time jobs to summer interns because “we want to make sure we're not adding people to teams where we don't expect to have roles next year,” Zuckerberg explained.
The recent moves prove Meta’s strongest admission that advertising revenue growth is slowing amid the race for users' attention, at a time when the company’s advertising that targets consumer attention has lost part of its touch due to new privacy restrictions from Apple Inc. concerning tracking iPhone users.
As TikTok lures users away from Meta's Instagram, Zuckerberg is making an expensive bet on the company's immersive virtual reality future which would eventually become people's main communicating field, the metaverse, a project he admitted will cost a loss for many years.
Meta's current internal priorities include Reels, competing against TikTok, and the metaverse. Meta had more than 83,500 employees as of June 30 and added 5,700 new hires in the second quarter. During its first quarter, Meta said annual expenses would be roughly $3 billion lower as opposed to initial expectations, trimming an estimated range that had been as high as $95 billion. “For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time,” Zuckerberg told his staff.
Meta stock went down 3.7% from Wednesday’s close, as its shares overall have fallen 60% this year. A Meta spokesperson has declined to comment.
Other companies dependent on advertising also faced the brunt of the economic crisis, such as Twitter Inc. which stopped hiring in May and asked employees to watch their expenses and reduce travel while Alphabet Inc.’s Google said it would slow hiring during the back half of the year. Snap Inc. diminished 20% of its workforce in August.