Meta, formerly Facebook, continues to find its way. So far it has not really been found, many employees will probably have to leave shortly. Most recently, the group reported mixed quarterly results, especially the meta division, i.e. the future concept that gave it its name, again sunk billions and caused the share to crash.
The share has already fallen 73 percent this year, the biggest slump came after the last quarterly figures, the paper is now back at the level of 2016. Because while sales fell by only four percent to 27.7 billion US dollars, profits halved to $4.4 billion. However, what bothers investors, analysts and the stock market most is the future concept. Zuckerberg's path into the “metaverse” is being questioned more than ever before, because the billions that have recently been invested there and will continue to do so have hardly been counted.
Meta burns a lot of money with meta
The meta concept costs Facebook a lot of money every year. This year, the division's nine-month loss was $9.4 billion, up from $6.9 billion in the same period last year. Zuckerberg continues to insist that this will prepare the company for a golden future. In return, cutbacks that are not growing well will be scaled back in 2023, Meta explained in the quarterly report. It was assumed at the time that this could include redundancies, but now it seems to be more concrete.
In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.
Meta on 26 October
The Wall Street Journal has only speculated how many employees will be involved in the forthcoming wave of layoffs. For employees, however, unnecessary travel was canceled this week, which speaks for the effects across the group. However, since the group recently had 87,000 employees, it is assumed that there will be several thousand jobs. This year alone, Meta hired over 15,000 new employees, compared to a combined 27,000 additional employees in the previous two years. Now the downsizing phase seems to have come, Meta has so far only responded diplomatically to the rumors: “focus our investments on a small number of high priority growth areas.”
This is expected step for a long time. The WSJ reported in a similar direction in September, followed in October by public letters from shareholders suggesting that Meta lay off at least 20 percent of the workforce in order to prepare for the future. At that time, the letter already summarized the problem areas of Facebook: Too many staff, too high expenses and too much meta.
- Reduce headcount expense by at least 20%;
- Reduce annual capex by at least $5 B from $30B to $25B; and
- Limit investment in metaverse/Reality Labs to no more than $5B per year.
Proposal from a shareholder to Meta on October 24
It should become clearer by the middle of the week what will be implemented at the end.