November 30, 2022

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Wall Street Journal: Zuckerberg to blame for dead slips - layoffs begin Wednesday morning

Wall Street Journal: Zuckerberg to blame for dead slips – layoffs begin Wednesday morning

Meta, the group formerly known as Facebook, is expected to lay off thousands of employees.

This is what The Wall Street Journal wrote in a case with anonymous sources over the weekend.

A dejected Mark Zuckerberg said Tuesday at a meeting with several hundred executives that he is responsible for the company’s gaffes and that his excessive optimism about growth has led to an overburden of staff, the Wall Street Journal wrote Tuesday, citing sources familiar with the meeting.

Extensive discounts

Zuckerberg said there will be widespread cuts and highlighted in particular that there will be layoffs in the employment and business areas, according to the WSJ.

A public internal announcement about the company’s winding up plans is expected Wednesday at around 06:00 ET, the time zone used on the US East Coast – 12:00 Norwegian time on Wednesday. After morning local time, employees who have lost their jobs will be notified, according to the Wall Street Journal.

The group, which operates platforms such as Facebook, Instagram and Whatsapp, has not been scaled back before, according to Bloomberg. But in September, founder and CEO Mark Zuckerberg announced a reorganization in the wake of sharply curbing growth in existing products.

After meeting with Zuckerberg on Tuesday, corporate managers in several departments began informing their subordinates about the cuts and reorganization, according to the Wall Street Journal.

The market immediately responded positively to the news on Monday, and the stock rose several percent when the Wall Street Journal story surfaced.

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Still from low levels. Besides the very expensive investment in the so-called “metaverse”, the belief in the Meta stake has taken a huge hit. The value has been reduced by about three-quarters from its peak level in September of last year. The stock is now trading at the same levels as in 2016.

Historic loss of global value

The name change to Meta first became known in October last year, after a long hype around the social media giant – linked to everything from the whistleblower who sounded the alarm about Negative health consequences for users, to allow rioters who stormed the US Capitol to organize.

When Zuckerberg presented his Meta plans in January of this year, it sent prices down 26 percent, the equivalent of $230 billion, or 2,500 billion crowns. This must be The biggest one-day loss of shareholder value in history.

Much can be attributed to Zuckerberg’s plans to invest tens of billions annually in the development of the “metaverse”, without a clear plan for when he will start generating revenue. It also doesn’t help that a lot of people are still struggling Find out exactly what this digital world will become, or where the commercial potential really lies. Additionally, the company is struggling with low user engagement and competition from new platforms like Tiktok.

Since January, the appetite for stock growth has taken a severe hit in the face of rising interest rates and ever-rising inflation.

Share class for frustration

When Meta provided new quarterly numbers in October, the company reported a drop in sales revenue, along with a sharp increase in expenses. Zuckerberg himself urged patience.

– I think we’ll discover these things over time. “I appreciate patience, and I believe those who are patient and invest in us will be rewarded,” the CEO said. Bloomberg.

For a little feasibility. The market responded with a new drop in prices of about 25 per cent, albeit from much lower levels than in January. A total of about 7,000 billion Norwegian kroner have since disappeared.

Mark Zuckerberg owns approximately 13 percent of the stock in Meta, but has 54.4 percent of the voting rights through a private class of stock. This shields his faltering strategy from frustrated investors, who may see tighter spending controls in the face of turbulent times.

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If any other company did this, you would have active investors writing letters, proposing new board members, and calling for changes. I think Mark got a crystal clear message about what investors want, but he made his decision, says Jim Tierney, investment director for US growth stocks at Alliance Bernstein for Meta Shareholders. financial times.

Zuckerberg personally participated in several meetings with discouraged investors, writes the same newspaper, citing anonymous sources. This should not contribute to creating a better atmosphere. (Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.