While 2021 was the year of all records for the Giants tech, their scores have dropped significantly this year. As a rule, in a crisis, even these companies have to tighten their belts. However, some are better protected than others. Unfortunately for Mark Zuckerberg, his company Meta is one of the biggest losers. And today he is forced to quit en masse. In total, more than 11,000 employees will leave Meta, according to the company’s announcement. This represents 13% of the group’s workforce. But comment did he get there?
My fault Mark Zuckerberg
In a letter to Meta employees posted on the company’s website, Mark Zuckerberg takes responsibility for these decisions and apologizes. In 2020, with online business booming, e-commerce was booming and Meta’s revenues were growing rapidly. Like many people, Zuckerberg believed that this growth would continue even after the pandemic. In addition, Meta increased its investment. But he was wrong. And with the return to normal, other problems are added. Indeed, inflation has set in, and as far as the Meta is concerned, it needs to be done. face to stronger competition, especially from TikTok. On the other hand, the group’s ad revenue is impacted by Apple’s changes to iOS that make it harder to target ads. Although the letter does not mention it, Mark Zuckerberg is also accused of spending lavishly on the development of the metaverse, while this activity is currently generating huge losses. In 2022 alone, these metaverse projects would be worth $9.4 billion. Meta’s latest quarterly results have been far from encouraging. Indeed, revenues fell by 4%, while expenses rose by 19%. Operating profit fell by 46%! “In this new environment, we need to become more capital efficient. We have shifted more of our resources to fewer high-priority growth areas such as our AI discovery engine, our advertising and commerce platforms, and our long-term vision for the Metaverse,” Zuckerberg wrote.
Meta forced to save
The group’s CEO says the layoffs were seen as a last resort. And before deciding to lay off 11,000 employees, Meta had already explored other ways to cut its costs. The group says it wants to cut discretionary spending (non-core spending). And Mark Zuckerberg even mentions “cultural changes” in the way we work. The example given by Meta’s CEO is for offices. For example, employees who spend most of their time outdoors will switch to office sharing. And Mark Zuckerberg points out that other similar cost-cutting changes will be announced in the coming months. On the other hand, with a few exceptions, the hiring suspension will continue until the first quarter of 2023.
An undervalued company?
This year, Meta shares have plummeted in the stock market, cause all of the factors discussed above, as well as the company’s costs to develop its AR/VR headsets as well as the metaverse. In his letter, Mark Zuckerberg points out that son the company is “deeply undervalued”. “Billions of people use our services to connect, and our communities continue to grow. Our core business is one of the most profitable ever created with huge potential ahead of us. And we are leading the development of technologies that will shape the future of social login and the next computing platform,” he wrote. It remains to be seen whether the announced measures will be enough to appease Wall Street.
