Meta's CEO, Mark Zuckerberg, recently published a message detailing his insights about the latest company layoffs. The Facebook parent company is reportedly slashing 13% of its total workforce, which is said to affect over 11,000 staff.
Meta Layoffs and Concerning Numbers
The ardent advocate of the metaverse said in the message that the recent job cuts were among the most daunting change he has ever authorized during his tenure as Meta's top executive.
In addition, according to Zuckerberg, the business is now implementing additional cost-cutting measures, including reducing discretionary spending and extending a hiring freeze through 2023.
The social networking juggernaut admitted that the Reality Labs and Family of Apps (FoA) segments were affected by the job cuts. The family of Apps includes the augmented and virtual reality operations of Facebook, Instagram, Messenger, WhatsApp, and other services. Could the layoffs have an impact on Zuckerberg's foray into the metaverse?
As reported by CNBC, Meta is currently undergoing a challenging period as shares plummet. Meta previously announced a second consecutive quarterly revenue decline and is now projecting a third decline in the fourth quarter, continuing their 2022 shares freefall.
Additionally, Meta's rising costs and expenses, which increased 19% year over year in the third quarter to $22.1 billion, have alarmed investors.
According to Reuters, some of it goes toward network infrastructure, data centers, and servers; a sizable portion also goes toward the metaverse project. Operating cash flow of $59 billion from the previous year supported Zuckerberg's metaverse-centric initiative.
The social media giant stated weeks ago that it plans to invest nearly a tenth of its $370 billion market capitalization in various projects, including a large bet on the metaverse.
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In the most recent quarter, the company's overall sales decreased by 4% to $27.71 billion, while operating income fell 46% to $5.66 billion, says CNBC.
More Details
The rise in e-commerce during the pandemic, said Zuckerberg, compelled him to increase investments, but this obviously did not turn out well for a variety of reasons. Zuckerberg cites the macroeconomic downturn, increased competition, and ad signal loss as the primary causes of the sharp drop in revenue. This part of the company message does not at all make any mention of the metaverse.
Meanwhile, analysts point out that part of the issue is that the company's primary revenue stream, the sale of advertising space on apps like Facebook and Instagram, is becoming stale.
Following Coindesk, Meta also postulated that Reality Labs' operating losses would increase noticeably year over year in 2023. In the most recent quarter, "Reality Labs" generated just $285 million in revenue, or 1% of the company's total.
"As we build our AI infrastructure, we're focused on becoming even more efficient with our capacity," Zuckerberg said.
The CEO also asserted that the company's infrastructure will continue to be an essential advantage for Meta and that the company will be able to continue with projects like the metaverse while spending less.
