Meta Platforms Inc META.O announced on Wednesday that it will lay off 13% of its workforce, or more than 11,000 workers, in one of the year’s largest layoffs, as the Facebook parent company confronts rising costs and a sluggish advertising market.
The large layoffs, the first in Meta’s 18-year history, come after hundreds of layoffs at other prominent digital companies, including Twitter, owned by Elon Musk, and Microsoft Corp MSFT.O.
This year, the pandemic-driven boom that lifted IT company valuations has turned into a bust because to decades of high inflation and quickly rising interest rates.
“Not only has online commerce returned to historical trends, but the macroeconomic slump, increasing competition, and advertisements signal loss have led our revenue to be far lower than I had anticipated,” stated Facebook CEO Mark Zuckerberg in an internal statement.
I accept responsibility for this error.
Meta’s shares, which have lost more than two-thirds of their value so far this year, increased by roughly 3 percent prior to the opening bell.
In addition, the business intends to reduce discretionary spending and continue its hiring freeze until the first quarter. However, it did not divulge the anticipated cost savings.
As part of the severance package, Meta will pay 16 weeks of base pay plus two additional weeks for every year of service, as well as all remaining paid time off.
According to the corporation, affected employees will also receive their shares that were scheduled to vest on November 15 as well as six months of healthcare coverage.
Zuckerberg is one of several top U.S. executives who have warned of an impending recession this year.
However, some of Meta’s wounds are self-inflicted.
A risky wager on metaverse, a shared virtual environment, has led the corporation to estimate expenses of up to $100 billion by 2023. This has prompted distrust among investors, who are losing patience with investments that Zuckerberg hopes to bear fruit within a decade.
In addition to facing fierce competition from TikTok and privacy changes from Apple Inc AAPL.O, the corporation is also in the attention of global regulators.
Meta had 87,314 employees as of September’s end.