Meta fires 11k employees - Effect of economy or being bullish about metaverse?

[avikz]

As people might be seeing in the news, Meta has fired 11,000 employees. It's a 13% reduction of their global workforce.

There might be multiple reasons behind it but two main reasons are surfacing across the social media,

1. They are preparing themselves for the upcoming recession and forecasted negative business revenues for upcoming years

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

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[jackg]

Have they even released anything from their metaverse project? I think a lot of big companies have these sorts of projects just to stay in the news and attract investors, much like their attempts at libra.

I think news like this is actually bad for tech firms as it does show they're making cutbacks to deal with a potential recession but it also shows they can't weather the storm and react to economic conditions as they arise (if they don't have a few years worth of funding to pay salaries - probably the cheapest part of the business - where is that money going to go? Are they just going to wait and be innovative in 3 to 5 years when everything's bullish again.

[Rruchi man]

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

The metaverse project has really cost Mark Zuckerberg a lot without a very good result.

1. They are preparing themselves for the upcoming recession and forecasted negative business revenues for upcoming year.

If they had not invested in the metaverse project, I'm very certain that they would not have laid off as many as 11,000 employees over claims of recession and a negative business prediction. The effects and the position that the metaverse project has put them must have encouraged this move to ensure that they remain in business.

[coupable]

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

I also do not think that it has stopped delving into new experiences, especially in the field of blockchain applications, which it still imagines that it will generate profits, even though this market is not huge and the expected size is at the level of Meta's aspirations.
It was announced a few days ago that the Instagram application will support the Polygon network to facilitate the use of NFT.
I do not expect that this large number of employees is dismissed due to the lack of sufficient financial resources. I expect that this is a comprehensive change in the policy of human resources management, especially since many projects have not been launched after allocating work teams to work on them. An example of these projects is the Libra coin, then Denim, in addition to Metaverse.

[cabron]

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

They took risks hoping to become the leader of the metaverse space. They have the will as they have been very successful in every investment they did in the past. But they didn't count on war to get worse and recession to come.

But the Meta development is not yet over. The recession may also be controlled soon now that the election is over and Biden's policies could be reverted as GOP won the house.

[NotATether]

Honestly to me, cutting your workforce if you do not have cash-cow services at hand is foolhardy.

I'm talking about staff cutting when all you got is some "Observer"-like digital service that hardly breaks even.

Here's a metaphor: If you're on a see-saw that's perfectly balance, and suddenly you put a 5-ton weight on it, you(r profits) will be flying against gravity and straight into the ground, assuming it doesn't outright break the see-saw (your business) first.

Meta will probably do fine, because Facebook. Twitter is in bigger trouble though.

[livingfree]

He really did gambled on it and I think that he's got no experience looking at the charts. Yeah, he may be experienced for something like this as if it's going to be huge in the future.

But, he's not on the right time because it was done already since last year. The money he has invested on it has removed him from one of the top rich people in the world.

This firing of employees is what he think is best for the company. It only shows that they also make mistakes in terms of decision making for their companies.

[Smartprofit]

As people might be seeing in the news, Meta has fired 11,000 employees. It's a 13% reduction of their global workforce.

There might be multiple reasons behind it but two main reasons are surfacing across the social media,

1. They are preparing themselves for the upcoming recession and forecasted negative business revenues for upcoming years

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

Currently, the world economy is in recession. 

People need real resources - food, oil, gas, metals, wood.  Interest in virtual reality and the Metaverse has fallen.  Under these conditions, investment in the creation of the Metaverse does not guarantee a quick profit. 

Therefore, the dismissal of employees is a painful, but forced decision.

The Metaverse will be created, but most likely not now, and perhaps not even in the current decade.

[carlfebz2]

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

Billionaires and huge investors arent that immune nor excluded if we do talk about the risk.It is really hard to make up some conclusions that he had made out the bad decision considering that we are still on a bear

market which it is really hard to distinguish about these negative numbers and could really say that it did really give that impact.It would be normal for a company on firing employees if it needs too but

when the time comes where this market be on greens again then expect that there would be some hiring again.It all do varies with the market trend and of course with the demand which is really hardly to be pushed through on this very long bearish market.Let the dust settle down and see further possible situation.

[Fortify]

As people might be seeing in the news, Meta has fired 11,000 employees. It's a 13% reduction of their global workforce.

There might be multiple reasons behind it but two main reasons are surfacing across the social media,

1. They are preparing themselves for the upcoming recession and forecasted negative business revenues for upcoming years

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

It's going to be a bit of both and even Mark Zuckerberg has been open about it. He said that he expanded the Facebook staff too far, which in large part is directly related to this metaverse fantasy that has been tried a dozen times before in the past - "3d worlds". I'm sure he got somewhere decent with it and took it further than it has ever been before, but ultimately he needs an audience of customers who will be able to participate and people are being rather careful with their money right now. He saw Elon firing a bunch of people and it is an opportunistic time to fire people when that happens, the attention is already elsewhere so it slips under the radar a little bit. The economy is also in trouble so all round spending is going to be coming down and job losses are part of that cycle too.

[Gyfts]

It's both. Nearly all the giant tech companies in the U.S. reported low earnings and lower userbase for Q3. These layoffs were inevitable considering the financial sectors throughout all of Q3 were all but certain a recession was coming. U.S. GDP for Q3 did not show recession, but my expectation is within the next 6 months there will be so it makes sense that Meta is laying off employees. Not that I would have expected the utter garbage of the "Metaverse" to be resounding success, regardless of the economy.

Side note - Musk also said that Twitter was losing 4M USD per day which contributed to his decision to fire half of Twitter's staff. Seems like we might be moving past the tech bubble that's existed for some number of years.

[OgNasty]

This shouldn't come as a surprise to anyone.  Not only was it stated this was coming, but the market has absolutely punished tech stocks this year.  I imagine that many companies will be joining Meta in the near future to layoff employees.  I only hope that it is contained to some extent and we don't see another massively damaging recession like we saw in 2008 when it was very common for people to be laid off from their jobs.  That extended into a massive drop for the stock market and housing markets, which led to stimulus by the government that caused the last 15 year runup in the markets topped by the Covid money printing that has now caused the government to even pull back on the market support. 

Pray this doesn't get worse, because there's plenty of time for it to get much worse, especially with Biden at the helm for another two years.

[DrBeer]

As people might be seeing in the news, Meta has fired 11,000 employees. It's a 13% reduction of their global workforce.

There might be multiple reasons behind it but two main reasons are surfacing across the social media,

1. They are preparing themselves for the upcoming recession and forecasted negative business revenues for upcoming years

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

You are absolutely right. The only thing I will add from myself:
1. Social networks have degenerated from normal means of communication, into something that is trying to shove intrusive advertising at every step and "sell" unnecessary goods / services.
2. Trust in social networks, as experts, is flying to 0. Income from advertising budgets that were inflated 5 years ago is flying there too ... Income is dropping sharply, it is not effectively growing, and regular costs are STABLE. And today they are still growing.

The conclusion from all this - what to do? Reduce, inefficient resources and regular costs! For example, staff... This is normal, this is self-regulation of the market.

[Hydrogen]

Labor costs are one of the largest liability chunks for large corporations. Especially tech based industry with high skill labor wages. The net sum of innovation and development for large tech corporations has diminished significantly in recent years. Which doesn't justify the expense of skilled labor wages in exchange for lack of expansion and invention. For whatever random reason, the intellectual muscle aren't pulling their weight, which leads to an era of fat trimming and slimming down to maintain viability.

Economic slowdown certainly doesn't help as it leads to forecasts of reduced advertising revenue, upon which internet platforms like facebook and meta depend heavily upon.

To an extent, the large amount of silicon valley headhunting and hoarding of personnel could have been implemented in the expectation of a future silicon valley dot com bubble. Everyone wants to control the developers and intellectual assets, perhaps expecting one of them to contribute towards a spin off side project that grows into the next billion dollar big tech monolith. With economic recession on the horizon, growth and innovation expectations are on the decline. Which leads to layoffs. Although, of course there are many other variables and circumstances in play.

[harizen]

2. Meta had invested heavily on Metaverse which failed to find users or ways to earn revenue. Now the investment is lost and putting huge financial pressure on Meta.

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

I think we just need to rely on what Mark said about the reason and that's it:

"to reduce costs following disappointing earnings and a drop in revenue"

I don't think that Mark did some gambling here. It's just that their Metaverse-related investment might need a longer timeframe before it can actually reach its peak. However, it will take a continuous heavy cost during the process, and reducing the company's expenses might be the best way to deal with it.

[KennyR]

The thought for the success is good, but being overconfident had ended up with the firing. This isn't good for a big corporate network. Elon Musk once after acquiring Twitter made a firing and that had different reason. What Meta done gives an outlook of down market which will directly affect their product. He should've made some alternate plans than getting into firing during the hard time.

Developing highly advanced system is good, but this needs to move with the reality. For now it looks like people aren't prepared enough to meet the standards of Meta.

[BigBos]

Which one you think might be the actual reason? Don't you think Mark had gambled quite heavily in an uncharted territory and put the existence into huge risk?

In my opinion, this baseline is due to the slow economic growth in the US this summer, and maybe even worse in the fall, besides, investors sent their shares so there was a decline in META shares from the start year. that's because investors are not happy with the allocation of funds made by Zuckerberg for financing into the METAVERSE project of $10 billion per year and Reality Labs, which manages the METAVERSE project, has lost $3.67 billion in its operations. on the other hand, the reason why META fired 13% of its employees was due to increased competition such as with TikTok and the loss of advertising signals which caused revenue to drop significantly and was driven by inflation that is now happening everywhere.

[2stout]

IMHO, it's about corporate and shareholder greed as these companies are not in the red- they are still making money, i.e., profit but not just as much, which expected in a global economic downturn.

[YUriy1991]

The hype about economic value is making headlines, but there are thousands of developers and entrepreneurs who are bringing their own dreams to this new frontier.

Metaverse may not be obvious to those in the marketing sector. But in my view, for those who have gone into cyberspace, it is a standard bearer for the future. The higher-ups at meta might predict that customers will make that jump from the internet to the metaverse, and honestly it will take time. Currently, Meta has suffered a significant loss of market value, and only time will tell whether this is due to being overly optimistic about its potential or being forced to downsize after facing layoffs and job cuts. may be.

[avikz]

IMHO, it's about corporate and shareholder greed as these companies are not in the red- they are still making money, i.e., profit but not just as much, which expected in a global economic downturn.

That certain can't be the only reason to fire 11,000 employees. Economic slowdown will impact all but Meta is a giant. Such kind of layoffs can only happen when a company spends money into useless areas. That's exactly what Meta did - invested in Metaverse. It has now become a major reason for its own suicide.

Mark Zuckerberg was so bullish on Metaverse that he changed the name of his company to Meta. Now they don't even have 100,000 active users there after burning billions and billions of dollars.