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The
mass layoffs, first in Meta's 18-year history, follow thousands
of job cuts at other major tech companies including Elon
Musk-owned Twitter and Microsoft Corp.
The pandemic-led boom that boosted tech companies and their
valuations has turned into a bust this year in the face of
decades-high inflation and rapidly rising interest rates.
"Not only has online commerce returned to prior trends, but the
macroeconomic downturn, increased competition, and ads signal
loss have caused our revenue to be much lower than I'd
expected," Chief Executive Officer Mark Zuckerberg said in a
message to employees.
"I got this wrong, and I take responsibility for that."
Meta, whose shares have lost more than two-thirds of their value
so far this year, rose nearly 3% before the bell.
The company also plans to cut discretionary spending and extend
its hiring freeze through the first quarter. But it did not
disclose the expected cost savings from the moves.
Meta will pay 16 weeks of base pay plus two additional weeks for
every year of service, as well as all remaining paid time off,
as a part of the severance package, the company said.
Impacted employees will also receive their shares that were set
to vest on Nov. 15 and healthcare coverage for six months,
according to the company.
Zuckerberg is among several top U.S. executives who have this
year sounded the alarm on an upcoming recession.
Some of Meta's wounds, however, have been self-inflicted.
A pricey bet on metaverse, a shared virtual world, has seen the
company forecast as much as $100 billion in expenses for 2023.
That has drawn skepticism from investors who are losing patience
with investments that Zuckerberg himself expects a decade to
bear fruit.
The company is also grappling with stiff competition from TikTok
and privacy changes from Apple Inc, while being in the
crosshairs of regulators around the globe.
Meta had 87,314 employees as of the end of September.
(Reporting by Aditya Soni, Nivedita Balu and Eva Mathews in
Bengaluru; Editing by Shounak Dasgupta)
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