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2:20 PM · 7 November 2022

Meta shares higher after WSJ layoffs speculations

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Shares of Mark Zuckerberg's recently oversold company, Meta Platforms (META.US) are gaining nearly 4% today before the market open, thanks to news from The Wall Street Journal regarding an impending wave of layoffs at the company. Investors are taking a positive view of the prospect of cost-cutting. At the end of September this year, the company employed nearly 87,000 people. Since inception, Meta's shares have been doing the worst of all S&P500 companies:

  • According to a report by The Wall Street Journal, thousands of the company's employees will be laid off, with the wave of layoffs expected to begin as early as this Wednesday. In addition, Zuckerberg, as part of an interview with all employees, stressed that there were several people 'who shouldn't be at the company,' which could mean that the layoffs will also affect senior employees;
  • Elon Musk's recent wave of layoffs may mean that the Met will have 'a lot to choose from' when recruiting for positions related to social media platforms in the future. Several tech giants have already declared interest in former Twitter employees;  
  • The lower number of employees will reduce the company's rising operating costs. However, Zuckerberg still points to a minimum of $10 billion in investment to build the Metaverse annually. Since the beginning of 2021, the company has spent nearly $15 billion on its Reality Labs division without receiving significant revenue from 'virtual worlds' technology, and must find solutions to privacy restrictions from Apple, intellectual property lawsuits (including from Immersion (IMMR.US), and competition. 
  • While the slowdown in the advertising sector can probably be considered a 'seasonal' problem, if the multibillion-dollar investment in Metaverse cannot be effectively covered by growing revenues from the new business field, and significant competition for Oculus VR devices from other big techs like Apple and Microsoft enters the market, investors are likely to reduce demand for the company's shares.

Meta Platforms (META.US) shares. H4 interval.

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