Last November, social-media giant Meta Platforms did something unprecedented since it was created in 2004: dismiss massive numbers of employees.
On Nov. 9, the parent of Facebook, Instagram and WhatsApp announced the elimination of 11,000, or 13%, of its workers, injecting the austerity cure underway in Silicon Valley and the tech world in general.
Don't Miss: Mark Zuckerberg Quietly Buries the Metaverse
A few months later Chief Executive Mark Zuckerberg told analysts during the fourth-quarter-earnings call that 2023 would be the year of "efficiency."
"We're working on flattening our org structure and removing some layers of middle management to make decisions faster, as well as deploying AI tools to help our engineers be more productive," Zuckerberg said.
"As part of this, we’re going to be more proactive about cutting projects that aren't performing or may no longer be as crucial, but my main focus is on increasing the efficiency of how we execute our top priorities."
Wall Street Likes Job Cuts
These cost reductions and promises that they would continue greatly pleased investors, who immediately forgave the CEO's many mistakes related to the metaverse, a virtual world that Zuckerberg flagged as Meta's Next Big Thing.
The Reality Labs unit, home to the metaverse projects, lost $4.28 billion in the fourth quarter, bringing its total operating loss for 2022 to $13.72 billion.
Prior to the job-cut announcements, Meta stock (META) had fallen 71% between Jan. 1 and Nov. 8, 2022, translating into a market-value crash of around $681 billion. Zuckerberg's personal fortune had decreased by $88.2 billion at the time, according to the Bloomberg Billionaires Index.
But since the job cuts were announced on Nov. 9, Meta stock has rallied strongly, gaining 92% to $184.90. Zuckerberg's net worth is also building up. This year, his fortune is up $22.8 billion to $68.4 billion as of March 6, according to Bloomberg Billionaires Index.
While growth uncertainties remain -- stubborn inflation forces the Federal Reserve (Fed) to continue raising interest rates -- Meta plans to continue to rely on drastic cost cuts to maintain profitability.
According to Bloomberg News, the social media giant is considering another massive round of job cuts this week, involving thousands of departures. The Menlo Park, Calif., company is fine-tuning these cuts, a move that has prompted high anxiety among employees, reports Bloomberg News.
One of the questions that some employees are asking themselves is whether they will receive their bonuses. Those payments were scheduled for this month.
A spokesperson for Meta declined to comment.
Growth at Meta Is Slowing
At last check Meta stock was up in a falling market as investors seemed to -- again -- like the prospect of job cuts.
"There's going to be multiple rounds until they get right," Jefferies analyst Brent Thill told CNBC in an interview on March 6 about Meta. "Wall Street doesn't want them to go down the metaverse angle. They want them to stick to their core [business]."
"If this report is correct, and there are thousands of more jobs [cuts] coming in, it's clearly a signal that they feel like they can do more with less. And again, I think that's the theme across tech. This is not a Meta-specific issue."
The tech sector last year cut more than 150,000 jobs, with demand fading as the pandemic eased, according to data startup layoffs.fyi. The pace has picked up sharply this year: The sector in less than three months has slashed 125,677 jobs.
Meta is going through a tough time. Last year, Meta saw its advertising revenue decline for the first time since the company went public in 2012. And its annual net income came in at $23.2 billion, 41% less than the previous year.
Some 3.74 billion people use at least one of the company's services (social networks and messaging) every month. But between inflation, which is eating away at advertisers' budgets, and fierce competition from apps like TikTok, ad revenues are decreasing.
The company is also affected by changes made by Apple (AAPL), which has restricted the ability of social networks to collect user data to sell targeted advertising.
Last month Meta launched a paid subscription on Facebook and Instagram to monetize new features and thus diversify its sources of revenue. Called Meta Verified, this service offers users the chance to have their Facebook and Instagram accounts verified, to ensure that an impostor or troll does not impersonate them.
Verified accounts carry a blue badge. The service costs $11.99 a month for users subscribing on the web, and $14.99 a month for those using Apple's iOS operating system.
Meta Verified looks like Twitter's Blue service, launched last November by Elon Musk, the platform's new owner.
