Technology

Will Meta Fire 14,000 People?

Meta Platforms Inc. (NASDAQ: META), the parent of Facebook, is much too big according to one large shareholder. This shareholder wants the company to fire 14,000 people and exit several of its businesses. It would be another devastating blow to the fortunes of big tech companies, which grew at remarkable rates after the Great Recession and posted equally remarkable increases in their share prices.

Meta’s share price rose to $380 in September 2021. It has fallen to $131, and many investors do not believe the slide is over. Like all other social media companies, it relies almost entirely on advertising revenue. Ad revenue has softened because of a slow economy. And Facebook’s user base is barely growing.

The solution to Meta’s problem is for the company to move into the virtual reality business. Altimeter Capital Chair and CEO Brad Gerstner, who owns 2 million Meta shares, wants it to cut “pricey investments in ‘metaverse’ technology — VR software and hardware — to no more than $5 billion per year.” Just a year ago, it would have been hard to imagine an activist investor would have had the leverage to attack the largest tech companies, including, Alphabet, Amazon, Apple, Meta and Microsoft. Meta’s failures have made it a fairly easy target.


However, the economic slowdown has not left the other big techs untouched. Microsoft has indicated it would have some staff cuts. Amazon has started to close some of the warehouses it opened during the pandemic. And these decisions are in advance of what could become a fairly harsh recession.

Meta has lost its way, which has been general perception for months. CEO Mark Zuckerberg controls the company’s voting stock, so no one can force his hand. It cannot be lost on him that an outsider has made a very large investment and has taken the company to task in public. Will he take the layoff advice? If Meta’s stock price gets worse, he may.

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