Meta To Lay Off Thousands Of Workers This Week As Tech Rout Continues

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key takeaways

  • Meta is rumored to announce significant layoffs in the coming days that could run into the thousands.
  • It’s the latest blow for the company, with their Q3 revenue numbers down 4% and the Metaverse plan burning around $10 billion a year.
  • They are not alone, other tech companies such as Shopify, Netflix, Robinhood, Snap and Coinbase have all made significant cuts this year.
  • For investors, direct technical investing has become much more difficult. Fortunately, there are alternatives available that harness the power of AI to gain an edge.
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And the hits keep coming. We’ve been hearing about inflation and the potential for recession lately, and now we have one more word to add to the list. Sorting out The tech sector has been sharply lowering its head count throughout the year as the stock crashed from its all-time high.

The list of companies that have had to show the door to employees is long and includes some very big names. Coinbase was one of the first CABs from Rank to lay off 1,000 employees earlier this year.

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Netflix fired 450 employees Shopify cuts its workforce by 10%Robinhood fired 23% of their workforce, equivalent to about 1,000 jobs, and Snap reduced their numbers by 20%. And don’t forget the most high profile clearout, Twitter. Elon Musk has wasted no time cutting a large number of employees from the payroll with the hope that he can reduce the workforce by as much as 75%.

So far Meta has been reluctant to take such sweeping steps, but it looks like that is about to change. Facebook’s parent company previously implemented a hiring freeze, but it clearly didn’t see it as enough to cut costs at a time when volatility and low growth are likely to continue.

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First Zuckerberg’s warning in 2022

While it may seem like the meta is late to the party when it comes to technical layoffs, the reality is that it’s been a long time coming. Zuckerberg was one of the first CEOs to signal a change in the status quo, saying in May that Meta employees should be prepared for an “intense period” of 18 to 24 months.

Unluckily, he told his management team to begin identifying underperformers, indicating that this particular round of layoffs may have taken months to make. He even said in May that “we plan to have a steady reduction in the workforce over the next year.”

worse than that, He also said that “Maybe there’s a bunch of people in the company who shouldn’t be here.” Ouch.

The situation has apparently gotten worse since then, given that they seem to be targeting reductions rather than simply implementing freezes and slow growth.

downsizing plan

Details are not yet known, with an announcement expected on Wednesday outlining the details. Mass layoffs in meta are likely to have much broader consequences than some other technical downsizing.

This is purely due to the size of the company. Meta’s business now includes Facebook, Instagram, WhatsApp, Oculus and dozens of other smaller teams.

With 87,000 employees, even a relatively small percentage of the workforce would equate to thousands of workers leaving the company. Fortunately for them the overall job market in the US remains strong, but the situation in Silicon Valley is likely to move into a new position that is a little more complicated than it was in the past two years.

Meta has been under intense scrutiny over the past 12 months, with their valuation falling to a ‘mere’ $250 billion in 2021 after hitting the trillion dollar mark.

Mark Zuckerberg’s insistence on creating his own version of the Metaverse (hence the new name) is also costing the company an absolute fortune. Reality Labs, a metaverse unit, lost $3.7 billion last quarter, bringing that division’s total loss to $9.4 billion this year.

That means Meta has lost roughly the market cap of a company as large as Paramount, Robinhood, American Airlines or LG.

Why is Meta laying off employees now?

Like most of the tech sector right now, meta is under pressure. So far things are going well (apart from the share price), but all this talk of the impending recession has pulled advertisers back on their marketing budgets.

This has started to soften demand for digital advertising, with companies that rely heavily on ad revenue, all expecting a slowdown in the coming month.

Their third quarter earnings call revealed a decline in revenue and profit while expenses also increased by 19%. It’s not good news, but the forecast was even more disappointing. Meta expects revenue to remain flat and also suggested spending will continue to climb.

The market kindly did not react, with the stock price losing nearly a quarter of its value following the announcement.

This is probably one reason why Meta is being forced to cut costs. Zuckerberg has committed to making the metaverse work, and it’s proving to be a costly exercise. It will continue to spend heavily on Reality Labs by cutting expenses from other departments

What does this technical volatility mean for investors?

Look, we’re not going to sugar coat it, boom time there’s probably still a way out. Tech investing has been pretty easy over the years. In fact, it’s been a bit of a cake walk for the past decade.

We see this situation changing slightly and it is more likely to continue, at least in the short term.

So there are a few different ways that investors can access it. The first is to change their overall strategy. Tech-focused portfolios have been great, right now they haven’t, but there are still a large number of companies doing great and driving up their stock prices.

Energy producers are a clear example. With higher oil and gas prices, companies such as BP (+41.07%), Shell (+46.16%) and Exxon Mobil (+78.63%) have seen their stocks rocket.

It’s not just oil stocks though. Johnson & Johnson (+1.10%) and McDonald’s (+2.95%) are holding well and others like Lockheed Martin (+34.53%) are rising strongly.

The point is, now might be a good time to widen the net a bit. Our active index kit It is a good choice for this, as it invests in the broader US market, but with a twist.

We use AI to predict how different segments of the market are likely to perform in the coming week, and then the kit is automatically rebalanced to take advantage of the projections. Not only that, but this kit specifically allocates funds to two technical ETFs, meaning it can increase or decrease technical risk as appropriate.

It is intended for investors who want to capture the overall market without a full index-only approach.

Other investors may want to stick with our AI-powered tech heavy portfolio portfolio security Some downside may provide support if volatility continues.

It works by having AI analyze your portfolio each week and assess its sensitivity to a range of different risks, such as market risk, oil risk or interest rate risk. It then automatically applies sophisticated hedging strategies to offset them.

This can be combined with our foundation kit such as the Emerging Tech Kit to capture the upside potential of the sector while also providing some support on the downside.

This is the kind of feature that is usually reserved for high-flying hedge fund clients, but we have made it available to everyone.

Download today For access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $100 to your account.

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