Meta’s Hire-then-fire Yo-yo Is Different This Time
NEW YORK, March 16 (Reuters Breakingviews) - One gigantic round of layoffs for Meta Platforms (META) was a misfortune. A second may raise concerns of moonshot-chasing carelessness. The $1.6 trillion owner of Facebook and Instagram may fire as many as 20% of its nearly 80,000 employees, Reuters exclusively reported. No definitive decision appears to have yet been made, and details could still change. But while an earlier purge came after clear signs of declining efficiency after a pandemic-induced hiring binge, a new one would look somewhat different.
It’s hard not to conclude that Meta had too many employees in 2022. Back then, founder Mark Zuckerberg was chasing the revolutionary virtual-reality experience dubbed the Metaverse, spending heavily behind it. As Covid-era restrictions receded, though, users’ interest in adopting legless, baby-faced avatars in artificial worlds waned in favor of engaging with the real one. More importantly, the company’s revenue per employee declined by a chunky 18% that year, an indication it had too much fat. The decision to lay off about 21,000 workers between late 2022 and early 2023, part of a heralded “year of efficiency,” seems inevitable in retrospect.
That ratio is hardly signaling trouble today. Output per employee has climbed considerably, with analysts expecting it to grow another 19% to around $3 million before news of headcount reductions emerged, according to Visible Alpha. New cuts would simply turn the dial further.
This looks at least somewhat different from similarly huge cuts at payments firm Block, which boss Jack Dorsey put in part down to efficiency-boosting AI tools but which came against the backdrop of still-bloated operations. Similarly, Zuckerberg has talked glowingly of chatbot-driven productivity, his new moonshot. He better be right. The company’s capital expenditure should easily exceed $100 billion this year, or about four times as much as it invested during its year of efficiency. Yet there have been substantial setbacks, including multiple restructurings and a delay in rolling out cutting-edge model Avocado, according to the New York Times. How much of an effect that has on payroll decisions is unclear. After one hangover from excessive optimism about Meta's future, though, another may still lie over the horizon.
CONTEXT NEWS
Meta Platforms is planning layoffs that could affect 20% or more of its workers, Reuters reported.
The company employed just under 79,000 people at the end of 2026, according to a securities filing.
In November 2022, Meta fired 11,000 workers, and in early 2023, it laid off another 10,000 employees.
Too many workers, or too much investment?
