Meta Platforms Inc (NASDAQ: META) is in focus this morning after the Wall Street Journal said the tech behemoth could start large-scale layoffs this week.
The multinational had 87,000 employees at the end of its third financial quarter and the coming layoffs, the report suggests, could affect thousands of those. It will be the first major cut to workforce in Meta – formerly known as Facebook’s history.
The stock market news, though, doesn’t come entirely out of the blue. CEO Mark Zuckerberg did signal on the earnings call late last month that the company was considering lowering its headcount.
In 2023, we’ll focus our investments on a small number of high priority growth areas. That means some teams will grow meaningfully, but most will stay flat or shrink. We expect to end 2023 as the same size or slightly smaller than we are today.
Meta’s profit and revenue was well below the consensus estimates in Q3 as we reported here.
The WSJ report did not reveal the exact number of employees that will be laid off. But it will likely be about 10% of the total headcount, as far as Loup Ventures’ Gene Munster is concerned.
He does see it as the right step; though, not sufficient to cure the broader problem for Meta Platforms.
The future of Meta will be dependent on whether the metaverse moves and what direction does it move in. They’re sticking to $10 billion in spending for Reality Labs. That number should be $5.0 billion.
Munster also doesn’t expect a 10% cut to be enough considering the Nasdaq-listed firm has more than doubled its workforce since 2020. On CNBC’s “Squawk Box”, he noted:
Even with this 10% reduction, it still doesn’t get them where they need to be. The stock would be up more if they’d have given specifics and more like a 20% headcount reduction. As investors, we want the headcount reducing in 2024.
Wall Street continues to recommend buying Meta shares that are up 5.0% on Monday.
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