Facebook parent company Meta will slash 13 percent of its staff, or more than 11,000 employees, as it faces a revenue crunch as advertisers pull back amid high inflation and a wobbly economy.
Meta CEO Mark Zuckerberg announced the cuts in a Nov. 9 blog post, in which he took the blame for overestimating the company’s growth prospects and overextending with investments.
The COVID-19 pandemic lockdowns led to a surge in e-commerce activity, and for Meta, that meant bigger-than-expected growth in revenue.
“Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended,” Zuckerberg wrote. “I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”
The Facebook founder went on to say that not only has the pandemic-era e-commerce boom abated, but a tanking economy, growing competition, and a pullback in advertising dollars have all “caused our revenue to be much lower than I’d expected.”
In addition to cutting over 11,000 jobs, Meta is also slashing discretionary spending and extending its existing hiring freeze through the first quarter of 2023.
The company is also scaling back budgets, reducing its real estate footprint, and looking for more areas in which to cut costs in the coming months. Zuckerberg said one of the changes would involve Meta staff who rarely come into the office having to start sharing desks.
The job cuts are the first in the 18-year history of the company.
As news of the layoffs hit headlines, Meta stock was up 4.32 percent in pre-market trading as of 7:10 a.m. New York time on Nov. 9.
Meta has seen its stock plunge in recent months and is down 71.5 percent year-to-date. At its peak in September 2021, Meta stock was trading at around $380 per share. Currently, it’s worth $96.47.
By Tom Ozimek
