Meta shares jump after confirming massive job cuts
9th November 2022 12:17
by Victoria Scholar from interactive investor
Just days after Elon Musk wielded a mighty axe at new acquisition Twitter, CEO Mark Zuckerberg is sacking thousands at his Facebook social media business.
Shares in Meta Platforms Inc Class A (NASDAQ:META) are trading higher by more than 4%, after Facebook’s parent company confirmed speculation that it is planning to slash the size of its workforce in an attempt to rein in costs amid this year’s share price plummet.
Meta is cutting staff by over 11,000 this year as it grapples with softening ad revenues and cost inflation. It follows Meta’s extremely disappointing quarterly earnings report last month which sent shares down 20% after it forecast a weak Christmas quarter and higher costs next year.
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Meta is the latest company in the tech sector to announce major layoffs, following similar moves from Twitter, Microsoft Corp (NASDAQ:MSFT), Netflix Inc (NASDAQ:NFLX) and Amazon.com Inc (NASDAQ:AMZN) lately. Within Big Tech, Meta is the standout underperformer this year, shedding more than 70% of its stock market value.
Meta has also been facing criticism for betting too heavily on the Metaverse, a gamble that so far has not paid off. Its Reality Labs division, which hosts its VR headsets has lost over $9 billion during the first three quarters of the year.
The wider tech sector has been in turmoil lately on the back of higher inflation and rising interest rates, with the removal of the punch bowl of cheap money turning investors away from tech, which has long been the stock market’s favourite sector until an abrupt sea change came about this year.
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