'Darker days ahead' - Analyst weighs in on Meta job cuts

Record ID: 1696853

  • Title: 'Darker days ahead' - Analyst weighs in on Meta job cuts
  • Date: 9th November 2022
  • Summary: NEWARK, NEW JERSEY, UNITED STATES (NOVEMBER 9, 2022) (REUTERS) (SOUNDBITE) (English) WEDBUSH SECURITIES, MANAGING DIRECTOR, DANIEL IVES, SAYING: “Facebook is spending like 1980s rock stars. And now growth has really come off significantly. The metaverse strategy continues to be an uphill battle. And in this macro environment, they're seeing a significant challenge from s
  • Embargoed: 23rd November 2022 15:47
  • Keywords: Facebook Mark Zuckerberg Meta job cut layoffs metaverse
  • Location: VARIOUS
  • City: VARIOUS
  • Country: US
  • Topics: Company News Markets,Economic Events,United States
  • Reuters ID: LVA005821209112022RP1
  • Aspect Ratio: 16:9
  • Story Text: Meta Platforms, Inc. said on Wednesday (November 9) it would cut more than 11,000 jobs, or 13% of its workforce, in one of the year's biggest layoffs as the Facebook parent battles soaring costs from its push into the metaverse amid a weak advertising market.
    The mass layoffs, the 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.
    “I think this is the beginning of much broader layoffs just across Silicon Valley. In fact, some darker days ahead as this recession is on the doorstep," said Daniel Ives, managing director of Wedbush Securities.
    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," Meta Chief Executive Officer Mark Zuckerberg said in a message to employees.
    "I got this wrong, and I take responsibility for that," he said.
    The company also plans to cut discretionary spending and extend its hiring freeze through the first quarter. But it did not specify the impacted regions or the expected cost savings from the moves.
    “I think the clock struck midnight for Facebook. You're seeing significant growth challenges and now they're cutting costs. Especially with this metaverse strategy, which is a risky bet. I think for Zuckerberg, this is going to be in our view as a moment of truth, how he navigates this," said Ives.
    It now expects 2023 expenses of as much as $100 billion, compared with up to $100 billion previously, with more of the resources being focused on areas such as artificial intelligence, ads, business platforms, and the metaverse.
    (Production: Kyoko Gasha)
  • Copyright Holder: REUTERS
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