Meta stock jumps after it announces 11,000 layoffs

Shares of Facebook and Instagram parent Meta closed up about 5% on Wednesday after CEO Mark Zuckerberg announced it was laying off 11,000 employees, or 13% of its workforce.

In a statement, Zuckerberg called the cuts “some of the most difficult changes in Meta’s history” and explained that its one of the steps he will take to cut discretionary spending.

“I want to take accountability for these decisions and for how we got here,” said Zuckerberg. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Markets responded positively to the cost-cutting measure, with Meta’s stock price initially jumping 8%. Share prices also rose on Monday when the job cuts were first reported by The Wall Street Journal.

The Meta CEO said he believed the surge of e-commerce during pandemic lockdowns would be a “permanent acceleration,” but it did not play out like he expected. Revenue fell as online commerce returned to trends, in addition to pressure from macroeconomic factor, increased competition and Apple’s iOS recent app privacy changes.

Employees being let go would receive 16 weeks of severance plus two additional weeks for every year of service, along with compensation for any remaining PTO. Health insurance, career help and immigration support would also be provided.

“This is a sad moment, and there’s no way around that,” he said. “To those who are leaving, I want to thank you again for everything you’ve put into this place. We would not be where we are today without your hard work, and I’m grateful for your contributions.

Some observers have pointed out that the headcounts at Meta and Twitter have doubled since 2018, putting the current round of restructuring into perspective.

The total number of employees at Meta climbed from around 17,000 in 2016 to 71,970 in 2021. The company had less than 10,000 employees in 2014 and under 5,000 in 2012.

Meta shares fell almost 25% in late October after it announced a drop in quarterly income due to continued pressure from TikTok and Apple’s recent ad-privacy changes, wiped out almost $85 billion of the tech giant’s market value. Amazon, Microsoft and Google parent Alphabet also saw their stock prices drop.