Meta Layoffs – Facebook Continues To Cut Costs

Meta Layoffs

Add this to the weak economy and Apple’s privacy policies, along with Meta Facebook’s CEO, Mark Zuckerberg’s fervent effort to create VR, Meta’s hold is beginning to show cracks. In fact, it has recently announced massive reductions in staff.

Through the years, Meta has grown into one of the largest technology companies in the world. Through Facebook, Instagram and WhatsApp, Meta has a firm hold on the world of media.

But, things started to change as a result of the growing growth of TikTok. Meta witnessed its daily active users drop at the beginning of the year for the first time since the past 18 years. Here’s the information you must know about the cuts and the reasons why they may not be a one-time thing in the event that things don’t improve soon.

An announcement of layoffs

Meta was able to lay off more than 10,000 employees in Nov. of this year and reduced its staff by 12%, and also implementing an employment freeze until early 2023’s quarter one. The layoffs are expected to be via Facebook, Instagram and WhatsApp and the metaverse will be less affected.

The most affected areas are recruiting and business teams. Meta had 87,315 employees as of close of the month September 20, 2022. It was an increase of 28.01 percent increase over the previous year. Prior to the layoffs, Meta was in a constant hiring streak. They went to great measures to attract top talent and offered exclusive benefits for employees, which included paid vacation time of 30 days for every 5 years.

What is the reason for layoffs of workers

The reductions in staff are largely because of the decline in the fortune Meta has experienced during the past year. In 2021, at one time Meta’s value was $1 trillion. However, multiple circumstances have significantly affected the value of Meta and its stock price. On July 20, 2022, Meta posted the first time it had ever lost revenues from advertising and posted a loss of 4% in revenues in its three-quarter of 2022. The loss ranged between $29 billion and $27.7 billion.

A deeper look at this number will reveal that impressions of ads which is the total number of ads displayed in a given period, increased by 16.99 percent over the course of the year. But the advertisers have less money money on advertisements, with the average cost of an advertisement falling 17% in the past year.

This decrease can be partly due to the more stringent privacy policies that Apple has adopted. Facebook, Instagram and WhatsApp apps track your personal information and create a account of yourself. The profiles then are used to market to advertisers to find the ideal customer.

With the latest Apple upgrade, Apple users will have the option of opting into the tracking of their data, making it harder for Meta to offer highly targeted ads. This type of advertisement isn’t as lucrative as it used to be, and advertisers are paying less.

Additionally it is also a sign that the economy is slipping and is likely to be in an recession by 2023. In the aftermath, numerous companies are cutting their expenses, and advertising budgets are typically among the first ones to be affected. When you combine these two factors, you’ll see a decrease in advertising expenditure and this is a negative impact on Meta’s revenue. With projections for $30.5 or $32.5 Billion for the fourth quarter, the total revenue in 2022 will be between $115 and 117 billion.

Meta’s Reality Labs division, also called the virtual reality as well as augmented reality division suffered a loss of $9.4 billion during the initial nine months in 2022, compared to a loss of $6.8 billion during the same timeframe in 2021.

In the earnings announcement, Meta stated that they anticipate Reality Labs operating losses to increase by 2023. This announcement has been a source of concern for the majority of investors. This company is continuing to invest without regard when making the metaverse but does not provide any timeframe for how long it will take to earn into a profit.

Meta is dependent on the revenue generated by advertising and hasn’t found another source of income. If revenue falls it will be forced to take tough decisions.

The other thing that is discouraging investors is the fact that selling of Quest VR headset have slowed. Revenue for the third quarter of The Reality Labs division was 49 percent lower, due to the lower Quest 2 sales. This raises the question of the reason Meta will release another model of its headset called called the Quest Pro, in 2023.

Meta is not the only one suffering its losses. It is almost every major tech firm has seen a decrease in value and revenue since the time that the Federal Reserve began increasing the Federal Funds Rate.

Meta is not the only one in cutting back on employees and imposing the hiring freeze in response to financial pressures. The difference is that Meta does not rescind the funding for its metaverse project.

Meta Moving forward

As of now the Mr. Zuckerberg has stated his support for the metaverse. He believes that the virtual reality world will be going to be the new “big thing” in connecting people in ways that Facebook has never been able to.

In the earnings call that was held last week on the earnings call, the CEO. Zuckerberg focused primarily on his metaverse vision and claimed that it is an exciting time for social media. He said that the number of daily users for all of its social media platforms grew to 3 billion users in the quarter that ended in 2022.

The future of Meta may be uncertain particularly when you consider how Mr. Zuckerberg has total control over Meta. This means that no one will be able to influence his decision to invest money on his project regardless of whether it shows evidence of financial success.

Many businesses do the reverse by having a different Executive Chairman and CEO. Amazon is an example. It is home to Jeff Bezos as the Executive Chairman, and Andy Jassy as the CEO. The separation of roles allows companies to change their roles more effectively, while ensuring they are profitable.

It is vital to know that the idea of a virtual world was previously tested in a virtual world called Second Life, which ultimately did not gain wide acceptance and acceptance.

Bottom line

The biggest question in the game is. Zuckerberg’s expenditure on the metaverse and the length of time he will be able to justify it. He anticipates that it will be even worse off in 2023, but also anticipates that it will eventually make into a profit. At present, Facebook, Instagram and WhatsApp are profitable. Their management is steady and prudent. They’re less likely to alter the business model that has been successful, even if they lose revenue.

There’s no timeline for when it’s going to be profitable for the business. It’s still to be determined whether he’s correct and if the cost will be worth the cost. The shares are down by 66% so far this year. And the best part is, you can enable your Portfolio Protection anytime to help protect your gains and limit the risk of losing money, regardless of which industry you invest in.