The economy can be a bi*ch, especially when the CEO of perhaps the world’s largest social media conglomerate declares that he has been subject to ‘bad investments’ and must now make his company more capital efficient. You heard it right when news of Meta Platforms Inc (META.O) Mark Zuckerberg firing 13% of its global workforce hit your ears. And this might only be a symptom of a brewing great depression underneath the digital economy. What do we mean?
Meta, Twitter, Microsoft Corp, and multiple other tech companies have started to lay off their employee count
The recent upsurge of Elon Musk as the dictator of Twitter has put Facebook and its father Meta into a corner. This is further lubricated by a macroeconomy that is globally under pressure, rising tax inputs, and a slowing online market.
- Meta firing employees come in numbers equating to 11,000 which is only 13% of Meta’s overall workforce. Twitter in a similar comparison let go of 50% of its global capacity which was only 3,000 and more.
- As it stands, Meta is not the first in the recent surge of multinational billion-dollar companies firing and reducing their staff. Microsoft Corp and Twitter have also indulged in something very similar.
- Mark pointed out that his overconfidence led to overstaffing. Elon Musk also recently said that Twitter loses almost 4 million USD a day.
Tech companies this month:
1. Twitter – Laying off 75% of employees
2. Apple – Hiring freeze
3. Amazon: Hiring freeze
4. Snapchat: Laying off 20% of employees
5. Meta: Laying off “thousands” this week
6. Microsoft: Layoffs have begun
7. Intel: Laying off 20% of employees
— The Kobeissi Letter (@KobeissiLetter) November 7, 2022
Mark Zuckerberg had miscalculated the growth of the e-commerce sector during the pandemic; which led to wrong investments
In his message, Mark Zuckerberg explained the reasons in more detail.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration even after the pandemic ended. I did too, so I made the decision to significantly increase our investments.”
- It is true, the onset of the pandemic did witness a total reclination of the world back into an alternate middle age, but with techs. Everyone was locked up in their homes and their only recluse was the online world.
- The Pandemic may have been the greatest onslaught of local and micro businesses, while the global industries which are already billionaires and trillionaires profited from a rising online economy.
Layoffs This Month (% of Workers):
1. Twitter: 50%
2. Cameo: 25%
3. Robinhood: 23%
4. Intel: 20%
5. Snapchat: 20%
6. Coinbase: 18%
7. Opendoor: 18%
8. Stripe: 14%
9. Lyft: 13%
10. Shopify: 10%
11. Meta: “Thousands”
12. Apple: Hiring Freeze
13. Amazon: Hiring Freeze
— The Kobeissi Letter (@KobeissiLetter) November 8, 2022
“Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
Why advertising market is down along with E-commerce
Now that the pandemic has seemed to cool down, although it still prevails in compartments in different nations as waves, much of the global hype has cooled down. Mark’s gamble on the state of the world may have been down fitting. But it isn’t just Mark suffering from the advertising market falling down. It’s also Twitter, Microsoft, Google and many other on the similar category.
- For today when the world returned back to work outside the home, there’s a gradual increase in small-scale local businesses (microeconomic entities) whereas the macro is drifting back to previous statuses.
- What this does is that the advertising market that profited from an upsurge of users in the online world now must resort back to the offline world where the users have shifted back to.
- This means there’s a sharp decline in companies wanting to invest through online ads. This affects not only Facebook or Meta but also Twitter, Google, and Microsoft.
Why the latest trend of lay-off In companies may indicate a digital depression
Facebook changed its name to Meta on this day one year ago.
Since then, the company’s market value has declined by $622 billion. pic.twitter.com/DsCc84ascI
— Jon Erlichman (@JonErlichman) October 28, 2022
- As things stand, not only Meta but multiple companies are firing their employees. In an effort to reduce their cost, expenses, and loss.
- The macro economy holding big MNCs may be feeling the hit of the pandemic finally after the pandemic ended.
- But as with how things work in the economy, if the major companies see a major downfall, it won’t be positive for the micro units of a nation.
Resembling the great depression in 1929-39, we don’t want to see another wall street crash. If the stock market goes down, everything will. Meta’s latest measures may be symptoms of a possible declining shares in the major companies. If they don’t get themselves together, things could probably be catastrophic.
As a side note, Meta stock jumped 8% after the company announced it will lay off more than 11,000 employees. So maybe Zuckerberg got part of the formula right. Although how this plays off should be treated by further economic experts. Or best yet, let the economy unfold as you sit back with popcorn. Mind you the popcorn prices may increase.
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