Meta, Facebook’s parent company, has fallen on hard times this autumn after their end of year earnings were lower than expected amid a bad year for tech companies.
Now, Meta owner Mark Zuckerberg is being forced to lay off over 11,000 employees, or 13% of the company’s workforce.
While the company exploded during the covid pandemic, Zuckerberg said in a statement that he expanded and hired aggressively in a move that backfired badly this week.
At the start of Covid, the world rapidly moved online and the huge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments.
Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.
Now, Zuckerberg says that the company will become more “capital efficient” which may indicate a shift away from his pet project the Metaverse which has bled money since its inception.
According to AP News, Meta spent $10 billion a year to fund the Metaverse, which Zuckerberg is betting will be the next boom for the technology industry.
Through all of the economic troubles that Facebook has found itself in, stock prices for the company are trending quickly downward and are at risk of reaching their 2014 price.
Given the increasing likelihood of a recession, many investors speculate that online marketing, which is Facebook’s largest revenue source, will face a stark decline.
Zuckerberg believes, however, that these factors are greatly overstated and that Meta will see a strong rebound in the future.
I believe we are deeply underestimated as a company today. Billions of people use our services to connect, and our communities keep growing. Our core business is among the most profitable ever built with huge potential ahead. And we’re leading in developing the technology to define the future of social connection and the next computing platform. We do historically important work. I’m confident that if we work efficiently, we’ll come out of this downturn stronger and more resilient than ever.
Meta now joins Elon Musk’s Twitter in the large majority of social media companies that have been forced to lay off massive amounts of employees this year.
This will certainly be a wake-up call to the large tech companies that believed themselves to be invincible.
This may be positive for society, forcing these companies to return to profit-driven mindsets, instead of trying to push their political agendas down the gullet of their users through “fact-checks” and evermore divisive content.
Whatever the case, this is an uncertainty in time for an industry that has only ever experienced massive growth since the popping of the tech bubble.
These companies will have to finally show that they are profit-driven if they are to survive.
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