The Wall Street Journal reports that Meta, the company that owns Facebook and Instagram, will start making significant layoffs this week.
Because investors are leery of making sizable bets on unimpressive metaverse offerings that might take years to become profitable—if they ever do—the company has seen its share price fall by more than 70% this year. While TikTok, a quickly growing rival, and privacy reforms on Apple devices pose serious risks to Meta’s social media dominance, the company is still a social media giant.
Leaked documents reveal that even Meta workers who are working on the metaverse services are not satisfied with them, with one saying, “An empty world is a sad world.” Investors have urged CEO Mark Zuckerberg to reduce the company’s spending in the metaverse but to no effect.
According to Zuckerberg, the company’s future lies in the metaverse, which will require more than $10 billion in investments per year. According to the Journal, the corporation has spent $15 billion on the campaign since the start of last year. The most recent quarter saw a 98% decline in free cash flow at Meta due to its fast-increasing expenses.
Facebook’s layoffs follow even more severe ones at Twitter, whose new owner Elon Musk stressed on their necessity by tweeting on Friday, “There is no choice when the company is losing over $4M.”
Many investors were unprepared for Meta’s difficulties this year. Jim Cramer, the charismatic host of CNBC’s Mad Money, is one of them. Earlier this year, he repeatedly informed viewers that he believed Meta shares will increase once more. After Meta disclosed yet another challenging quarter late this month, Cramer somberly admitted, “I made a mistake here. I was mistaken. I had faith in this management group. That was a bad decision. I regret the extreme hubris displayed here.
Joe Rogan, a podcaster, asked Mark Zuckerberg about running the company in August.
“It’s almost like every day you wake up and you’re punched in the stomach. You wake up in the morning, look at your phone, and get like a million messages. It’s usually not good. People reserve the good stuff to tell me in person.”
Employees at Meta won’t be totally shocked by the layoffs. At a corporate meeting in June, CEO Mark Zuckerberg said, “Realistically, there are probably a bunch of individuals at the firm who shouldn’t be here.” Recently, company administrators advised staff to cancel all unnecessary travel.