West News Wire: CEO Mark Zuckerberg announced in a memo to staff on Wednesday that Facebook parent company Meta is eliminating 11,000 jobs, or approximately 13% of its workforce, as it struggles with declining sales and larger digital sector problems.
The employment losses come just one week after Twitter’s new owner, billionaire Elon Musk, implemented a large-scale layoff program. Numerous positions have been eliminated at other tech firms that hired a lot during the outbreak.
According to Zuckerberg, he decided to hire quickly because he expected substantial growth even after the pandemic lockdowns were lifted.
Zuckerberg said in a statement, “Unfortunately, this did not play out the way I intended. “Online shopping has not only reverted to previous patterns, but the macroeconomic slump, increasing competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going outside again, revenue growth began to falter.
Of particular concern to investors, Meta poured over $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Spooked investors have sent company shares tumbling more than 71% since the beginning of the year and the stock now trades at levels last seen in 2015.
An economic slowdown and a grim outlook for online advertising by far Meta’s biggest revenue source have contributed to Meta’s woes as well. This summer, the company posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall.
Some of the pain is company-specific, while some is tied to broader economic and technological forces.
Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm. He tweeted that there was no choice but to cut the jobs “when the company is losing over $4M/day,” though did not provide details about the losses. Snap, the owner of Snapchat, also recently laid off 1,000 workers and online real estate broker Redfin said Wednesday it is cutting 862 employees.