On Wednesday, Meta made its largest-ever staff reduction announcement.
What does this mean?
In its depressing report from last month, Meta disclosed a reduction in income for the second consecutive quarter as well as mounting losses from its high-risk metaverse wager. Meta's market value was wiped down by more than $89 billion as investors dumped the company like boiling potatoes. The decreasing trend might continue given the slim likelihood that fired-up rivals would take a break or that cost-conscious clients will increase their advertising budgets. However, Zuckerberg has a strategy: The largest layoff in the history of the company, 11,000 people, were to be let go by Meta on Wednesday. This represents around 13% of the company's workforce. Other cost-cutting strategies are in the works as well, with budgets, benefits, and even entire offices up for grabs. But that bad news for staff could be good news for profit, which might be why investors sent its shares up 3% after the news.
Why should I care?
No one is immune to the consequences of the global economic recession, including tech corporations that are scrambling to slash staff in order to save money, as the past few months have demonstrated. As an illustration, this week, Apple, Amazon, and Alphabet all halted or paused their own hiring, while Salesforce revealed an intention to do the same. The company fired about half of its employees last week when Musk became leadership, but has already started pleading with some of them to return. At least Twitter has shown what not to do.
Source: The Wall Street Journal, FactSet
Since TikTok is frequently viewed as Meta's main competition in the race for public attention, Meta was probably motivated to develop Reels, a format resembling TikTok's bite-sized videos. But as of right now, it appears that even TikTok is feeling the pinch after its parent company ByteDance on Wednesday slashed a sizable $2 billion off this year's ad revenue forecasts.
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