Meta, the parent company of Facebook, has begun laying off technical employees as part of its restructuring efforts to streamline operations and increase efficiency. Wall Street has applauded the downsizing, with Meta shares soaring 81% this year after losing two-thirds of their value last year. The company’s core business is struggling, and it is spending billions of dollars developing technology for the nascent metaverse. The layoffs come as the company faces the challenge of balancing innovation with maintaining profitability and efficiency.
Meta, the parent company of Facebook, announced layoffs in March 2023. The latest round of job cuts is part of Facebook CEO Mark Zuckerberg’s plan to streamline operations and increase efficiency. As part of this plan, the company is laying off technical employees, with other departments scheduled for cuts in the coming months.
Employees with technical expertise, including those in user experience, software engineering, graphics programming, and other disciplines, revealed their layoffs on Wednesday, April 19, according to LinkedIn posts. Some product-facing teams were also hit, with business-facing roles like finance, legal, and HR scheduled for cuts beginning in May. The layoffs also had an impact on a number of programmers who worked on games.
The layoffs are part of a larger restructuring effort that started in November 2022, with the company targeting 10,000 job cuts. The restructuring effort is expected to result in between $3 billion and $5 billion in restructuring costs. The goal of the restructuring effort is to increase efficiency and streamline operations in the wake of declining ad revenue and a drop in the company’s stock price.
While the company’s core business is struggling, Meta is spending billions of dollars a quarter developing technology for the metaverse. The metaverse is a nascent market that has yet to crack the mainstream, representing a risky bet for the company. Meta’s Reality Labs unit, tasked with building the metaverse, recorded a $4.28 billion operating loss last quarter, bringing the unit’s total losses for 2022 to $13.72 billion.
Despite the company’s struggles, Wall Street has applauded the downsizing, with Meta shares soaring 81% this year after losing about two-thirds of their value last year. Analysts are projecting another quarterly sales drop when Meta reports its first-quarter earnings next week. The company’s previous guidance called for sales of between $26 billion and $28.5 billion, which means the streak of revenue drops could end if Meta reaches the top end of the range.
The affected employees would undoubtedly be significantly impacted by the layoffs as they now have to compete in a competitive job market for new employment. The job layoffs also highlight the difficulties technology companies have in juggling the needs of innovation with the requirement to preserve efficiency and profitability.
Overall, the layoffs are a sign of the growing pressure on Meta to deliver results and maintain its position in the highly competitive technology industry. As the company continues to invest in the metaverse, it will need to find a way to balance its innovation with the demands of shareholders and customers, all while navigating a challenging economic environment.