Facebook is making changes to respond to slowing growth
Facebook (FB) – Obtain a Class A report from Meta Platforms Inc. Getting ready for the tough days ahead.
The social media giant has just taken steps to cut its costs in anticipation of the slowdown in growth that many economists have predicted. The company, which rebranded itself as Meta Platforms last October, has decided to change its hiring policy.
A source told TheStreet that Meta plans to halt or in some cases slow hiring for most mid- to senior positions. This comes after the last stop hiring early-career engineers two weeks ago.
The goal is to review priorities and align recruitment targets with current market estimates and pace, the source said.
“We regularly re-evaluate our talent pipeline according to the needs of our business and in light of the expenditure guidance provided for this earnings period, we are slowing its growth accordingly,” a Meta spokesperson told TheStreet in an emailed statement. “However, we will continue to grow our workforce to ensure we focus on the long-term impact.”
Last month, Facebook’s parent company said earnings for the three months ending in March were pegged at $2.71, down 17.9% from the same period last year but strongly topping street expectations of $2.56 a share.
Meta said group revenue rose 6.6% to $27.908 billion, nearly all of it coming from the new “family of apps” division the company created last year, below analyst estimates of $28.2 billion. Advertising revenue rose 6.1% to $27 billion.
Facebook slows down and stops hiring
After suffering its first-ever drop in daily active users in the last quarter, Meta said the numbers were up 4% from a year ago at 1.96 billion, ahead of the street consensus of 1.951 million, suggesting the social media group was able to balance the market. Sharing the earnings of China-based TikTok with the Facebook and Instagram apps.
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Faced with this not very optimistic picture, the source said, Facebook expects that hiring fewer people this year than previously expected will put the company in a stronger position in the future. Having this level of discipline in managing expenses is a good thing for her overall business.
In addition to the slowdown in growth, the company attributes the hiring freeze to the Russian invasion of Ukraine, which caused its platforms to be banned in Russia and caused many advertisers in Europe to revise their marketing budgets. The reopening of the economy is also affecting online advertising.
Facebook also warned in January that it expected to lose $10 billion in revenue for 2022 due to in-app tracking that users of Apple devices have blocked.
The source said that after two very strong years as more activity and commerce moved online due to the pandemic, the activity is now increasingly turning offline. Therefore, Facebook expects a softening of business performance across the industry, including as a result of iOS changes affecting the entire online advertising industry and the war in Ukraine.
Meta recruiters have begun turning off tech screens and interviews for some roles, outside of a few exceptions.
The source added, however, that the company does not plan to lay off workers at this time. This is a focus of the previous strong growth targets set at the beginning of the year. Facebook added more than 5,800 new employees in the first quarter, the majority of them in technical positions.
Mark Zuckerberg’s company ended the quarter with more than 77,800 full-time employees, up 28% over last year.
Facebook is currently focusing on the metaverse, a virtual world in which we are asked to interact via avatars and with the help of technological tools such as virtual reality headsets.