Facebook Braces For Bloodbath: WSJ

MENLO PARK, CA — For the first time in the company’s storied 18-year history, Facebook is readying for mass layoffs.

Meta, the Menlo Park-based behemoth’s parent company, is expected to announce staff reduction plans as soon as Wednesday, The Wall Street Journal reports.

Meta’s workforce of 87,000 has already been told to cancel nonessential travel starting this week, according to the report.

The announcement comes amid a troubled time for the tech sector and social media companies in particular. It follows reports that Elon Musk has axed approximately half of Twitter’s workforce in his first week at the helm of the company since purchasing it in a $44 billion hostile takeover.

Meta’s stock value has plunged more than 70 percent this year, making it among the S&P 500’s worst performers of 2022.

Facebook’s precipitous fall is largely attributed to CEO Mark Zuckerberg’s risky and expensive venture into virtual reality.

The Facebook founder has already bet more $15 billion on the company’s Reality Labs division, according to the report.

The Federal Reserve’s efforts to contain inflation by raising interest rates has hit the tech sector especially hard according to Josh White, an assistant professor of finance at Vanderbilt University.

Unlike other industries, Silicon Valley companies have few other options other than reducing staff when the cost of borrowing money becomes prohibitive, White told The Washington Post.

“For them to make money, sometimes it takes years,” White told the news outlet.

“I think we’re seeing an unwinding now that’s typical of cost cutting measures when we see a slowing economy. Their value comes from their intellectual property which is patents, trade secrets or people.

“You can’t cut costs on patents. Trade secrets are what they are. That just leaves people. That’s where you have to cut costs.”

Zuckerberg’s cryptic remarks during a June meeting appeared to signal the magnitude of the problems at Menlo Park.

“Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said, according to the WSJ.

Zuckerberg telegraphed the job cuts in an Oct. 26 third-quarter earnings call that affirmed his commitment to heavy investments in virtual technology.

“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year,” Zuckerberg

“In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”

Read more in The Wall Street Journal