Meta Fires 11,000 Employees due to Metaverse Losses
Before the layoffs, Meta's workforce count was 71,970, up roughly 23% from 2020. In a message to staff on Wednesday (Nov. 9), Facebook founder Mark Zuckerberg accepted responsibility for the decisions that led the firm to this point.
Is Metaverse the Reason Behind the Downfall of Meta?
After years of hints about wanting to take interactions between people to the next level. Zuckerberg disclosed last October that the company's strategy would be centred on developing the Metaverse. It will be a 3D virtual space in which people can attend virtual events, play games and purchase merchandise and virtual real estate using crypto.
The company's first $10 billion bet in the Metaverse had a substantial influence on Meta's financial performance for fiscal 2021. But that didn't stop Zuckerberg from pouring additional money into "something we don't know what it is," as Ethereum co-founder Vitalik Buterin put it.
According to a Business Insider story released at the end of October, Meta has spent around $36 billion on the metaverse. The consequences of such outlay were apparent in Q3 of 2022, when Meta shares fell even more, extending this year's losses to more than 70%.
Meta stock's value has dropped to $274 billion, down from an all-time high of nearly $1 trillion in September 2021. Zuckerberg's net wealth has dropped to around $35.6 billion, off from $142 billion in October 2021.
What led to the Layoff of Employees?
Last month, a stakeholder sent an open letter requesting the corporation to minimize expenditures by decreasing expenses on the Metaverse and downsizing the staff.
The layoffs came on the heels of a disastrous financial report last month, which revealed that Meta's net income had plunged 52% while expenditure had grown by 19%. However, Zuckerberg had hinted at the decision weeks before, suggesting that the business expected to decrease funding for the majority of its teams.
Other investors respond favorably to the suggestion, compelling Zuckerberg to act. Investors reacted favourably to Wednesday's layoff news, sending Meta stock up 6.57%.