Quick take:
- Meta has laid off more than 11,000 workers.
- The Facebook parent’s bet on the metaverse is partly to blame for the decision.
- Mark Zuckerberg confirmed the layoffs on Tuesday amid pressure from shareholders.
Meta Platforms Inc. (NASDAQ: META), the parent company of Facebook has announced 11,000 staff layoffs, effectively reducing its workforce by 13%. Before announcing the layoffs, Meta’s employee count stood at 71,970, up by nearly 23% from 2020.
Zuckerberg on Tuesday confirmed his company will be laying off workers with the official announcement coming on Wednesday. This is the first time Meta has announced mass layoffs in its 18-year history.
The announcement comes barely a year after Facebook rebranded to Meta Platforms (in October 2021) in a move taken to signal its new direction.
After years of hinting about taking human interactions to the next level, Zuckerberg revealed last October that the company’s strategy will be focused on building the metaverse, a 3D virtual space where people can play games, attend virtual events, and buy virtual real estate and merchandise using cryptocurrency.
The company’s inaugural $10 billion investment in the metaverse had a significant impact on Meta’s fiscal 2021 financial results. But that did not deter Zuckerberg from pumping more money into what Ethereum co-founder Vitalik Buterin termed as “something that we don’t know what it really is”.
Meta has spent approximately $36 billion on the metaverse to date, according to a Business Insider report published at the end of October. The repercussions of that expenditure hit home during the third quarter of 2022, with Meta shares plummeting further to extend this year’s declines to more than 70%.
Meta stock has seen its value plummet to a value of $274 billion down from its all-time high of more than $1 trillion in September 2021, with Zuckerberg’s net worth falling to about $35.6 billion, down from $142 billion in October 2021.
Meta’s woes were compounded last month when a shareholder wrote an open letter asking the company to reduce expenses by cutting spending on the metaverse and restructuring the workforce.
The request receives notable attention from other investors forcing Zuckerberg to act. Investors responded positively to Wednesday’s layoffs announcement, rallying the Meta stock by 6.57%.
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