News Facebook hardware in big trouble and some employees won’t recover
Published on 07/11/2022 at 12:40
Currently in a very bad financial patch, Meta, Facebook’s parent company, is preparing a vast internal layoff plan. The first wave could arrive this week, just days after the Twitter debacle.
Bad weather for Silicon Valley! After a dark week at Twitter, which saw thousands of employees fired overnight following the takeover of the platform by Elon Musk, it’s the turn of another American tech giant to be at the center of full attention: Meta. The company, parent company of Facebook and Instagram, has been unscrewing on the stock market for several months and announced quarterly results at half mast at the end of October.
A year ago, Meta stock was hovering around $338. Today, it is barely worth 90, which shows rather well the collapse of what was for a long time one of the most powerful companies in tech in the world. Within a year, Meta therefore lost more than 600 billion dollars in market capitalizationand saw its net profit drop by 52% over the same period, to reach 4.4 billion dollars in the third quarter of 2022. A situation that should have important consequences in the days to come.
The Meta share price over the last year.
Meta should lay off massively this week
If Twitter would have laid off 50% of its workforce, or about 3,700 people last week, Meta could for its part lay off around 10% of its employees by starting the process this week. When we know that the Meta group currently has 87,000 employees, this therefore represents 8,700 jobs that could be lost in a few days. If the situation were to be confirmed – some observers refer to Wednesday, November 9 for the first announcements – this would clearly mark a turning point in the history of Silicon Valley.
Indeed, since its creation in 2004, Meta, which was only Facebook in its infancy, has never laid off en masse. It’s even quite the opposite: the group has often hired a shovel. Besides, the number of its employees has grown by nearly 28% in one yearwhile its action was already falling sharply on the stock market.
If Meta has hired so many people, including during the pandemic period, it is because the group wanted to massively develop its famous metaverse to accelerate its adoption. In particular, Meta hoped that companies now turned to teleworking would favor virtual reality to create remote meeting spaces.
But, as we know, nothing really went as planned on this subject. Horizon Worlds, the application dedicated to the metaverse which is accessible from Meta Quest helmets, is struggling to convince. These developers themselves are not interested in it. And Meta can’t even rely on historical activities anymore since the social network Facebook announced in early 2022 that it had seen a decline in the number of its active users.
It now remains to be seen how Mark Zuckerberg’s company will go about announcing its layoff plan. After the Twitter affair and the way Elon Musk went about cleaning up, there is no doubt that the Meta method will be scrutinized in turn.