Meta is to cut another 10,000 jobs and eliminate 5,000 vacancies as the social media giant wrestles with a slump in advertising revenues amid harsher economic conditions.
In an update to staff, Meta boss Mark Zuckerberg told employees he would begin restructuring plans focused on flattening teams, canceling lower priority projects, and reducing hiring rates.
“This will be tough and there’s no way around that. It will mean saying goodbye to talented and passionate colleagues who have been part of our success,” he said.
Zuckerberg added: “At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years. Higher interest rates lead to the economy running leaner, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation.”
The cuts add to the 11,000 staff that were let go in November last year, amid restructuring aimed at slashing the company’s costs. Meta had 86,000 staff at the end of December, implying a cut to headcount of about 12%.
Meta shares have plunged 50% since their peak in September 2021 as the firm tackled soaring inflation and a downturn in demand for advertising from which it derives most of its turnover. The company reported revenue of $32.2 billion in the three months to end December 2022, a fall of 4.5% on the previous year.
Facebook’s UK employee headcount swelled 37% in 2021 to 5,148, filings with Companies House show, while its employee costs jumped to £1.4 billion, an average of £262,317 per worker and a 6% rise on the previous year. Meta could not confirm how many UK jobs would be affected as part of the layoffs, but a 12% headcount cut would amount to approximately 600 jobs being axed.
Meta shares rose 5.4% in the moments following the opening of the stock market on Wall Street, as investors reacted positively to news of further efficiency savings.
There have been over 128,000 tech job cuts worldwide since the start of the year, according to tracking site layoffs.fyi.
Victoria Scholar, Head of Investment, Interactive Investor says, “Mark Zuckerberg said this is the year of efficiency and he’s clearly taking drastic action in terms of reducing the size of Meta’s workforce to achieve cost cuts after last year’s turmoil for the sector which hit Facebook’s parent company hard. In terms of investor confidence, his aggressive approach seems to be paying off. The stock has already rebounded by more than 50% year-to-date with shares extending gains today.
“The pressures on the tech sector last year from weak economic growth, slowing ad revenues, sky-high inflation and rising interest rates all remain, suggesting that further tech sector job cuts could be on the cards. Given that share prices have responded so positively to major lay-off within Big Tech, it is possible to see how tech companies would be tempted to trim the fat further.”
