Meta Platforms, Inc. — formerly Facebook — is laying off a significant portion of its workforce, CEO Mark Zuckerberg said in a letter to employees on Wednesday.
“Today, I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.”
Meta’s layoffs come following an open letter from Brad Gerstner at Altimeter Capital Management to Mark Zuckerberg (and the Meta Board of Directors) titled “Time to Get Fit,” which expressed concern about the company’s financial trajectory and recommended it take immediate steps to improve its balance sheet.
The letter asks Meta’s CEO and Board to improve guidance in three critical areas, including reducing headcount by at least 20%, reducing annual capital expenditure (CapEx) by at least $5B from $30 billion to $25 billion, as well as limiting investment in the metaverse / Reality Labs to no more than $5 billion per year.
Meta’s third quarter 2022 financial report was less than ideal for investors who have grown frustrated with the company’s push toward the Metaverse and its exorbitant spending.
The report highlighted the company’s rising costs and expenses, which increased 19% year-over-year from $18.5 billion in 2021 to $22.1 billion in 2022. In addition, the company’s revenue declined by 4% to $27.71 billion in the quarter, while operating income slipped nearly 50% from the previous year to $5.66 billion.
In response to the growing uncertainty around Meta’s new business direction and its uncontrolled spending, the company’s share price (NASDAQ: META) has plunged more than 70% to $88.09, down from its 52-week high of $353.83.
“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,” Zuckerberg said in Wednesday’s letter.
Zuckerberg’s letter to employees included the following details about the layoff:
- Severance. We will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap.
- PTO. We’ll pay for all remaining PTO time.
- RSU Vesting. Everyone impacted will receive their November 15, 2022, vesting.
- Health Insurance. We’ll cover the cost of healthcare for people and their families for six months.
- Career Services. We’ll provide three months of career support with an external vendor, including early access to unpublished job leads.
- Immigration Support. I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need.
“There is no good way to do a layoff, but we hope to get all the relevant information to you as quickly as possible and then do whatever we can to support you through this,” Zuckerberg said. “Everyone will get an email soon letting you know what this layoff means for you. After that, every affected employee will have the opportunity to speak with someone to get their questions answered and join information sessions.”
Shares of Meta shot up 7.5% Wednesday morning following news of the company-wide layoff.