- November 9, 2022
- 4 minutes read
Facebook Parent Firm Meta To Lay Off 11,000 Employees
We can call 2022 the year of layoffs in the tech industry. Many tech companies have cut a considerable number…
We can call 2022 the year of layoffs in the tech industry. Many tech companies have cut a considerable number of jobs after enjoying a boom in 2020 and 2021 fuelled by increased demand during the Covid pandemic. The latest company to institute layoffs is Meta (NASDAQ: META), the tech giant behind social media platforms Facebook and Instagram.
Meta will lay off over 11,000 employees representing 13% of its workforce, the company confirmed in a regulatory filing on Wednesday. It represents one of the biggest layoffs seen in the tech industry this year but not surprising given broader market conditions and mounting shareholder pressure on Meta to cut costs. The company has spent billions of dollars on a “metaverse” push led by CEO Mark Zuckerberg– $9.4bn so far in 2022, according to its financial statements.
It’s not out of the ordinary for tech companies to spend billions on long-term bets with hopes of cornering a potentially lucrative market. Yet, Meta’s investors appear to be unusually displeased with the company’s direction– its stock has fallen 70% over the past year and wiped over $600 billion of market value, which is unprecedented even when considering the broader market slump.
In a statement, Meta CEO Mark Zuckerberg blamed the layoffs on a wrong bet that the rapid surge of online retail activities fuelled by the Covid pandemic would have continued after the pandemic ended. That bet led the company to rapidly expand its workforce, adding over 27,000 employees between 2020 and 2022. The e-commerce market that Meta relies upon for a great deal of its advertising revenue is now returning to its pre-Covid state, and it appears that the company no longer has a need for about 11,000 employees.
To nurse the layoff injury, Meta is offering four months of base pay as severance plus two additional weeks for every affected employee’s year of tenure with the company. It’ll also award stock compensation to eligible employees that were scheduled to vest this November.
This very month, many other tech companies have laid off hundreds of staff, including:
- Ride-hailing app Lyft cut nearly 700 employees (13% of its workforce).
- Payments processing giant Stripe laid off over 1,000 workers (14% of headcount).
- Enterprise software giant Salesforce laid off around 1,000 employees (less than 2% of its workforce).
- Online real estate company Opendoor laid off 550 employees (18% of its workforce).
- Fintech startup Chime cut 160 employees (12% of its headcount).
Meta’s stock rose over 6% following the announcement of its layoffs. The company has a current market capitalization of $272 billion, down from a peak value of over $1 trillion as of August 2021.