Meta slips 3.4% as it slashes engineer hiring, 'turning up heat'

Drew Angerer/Getty Images News

• Meta Platforms (NASDAQ:META) is slashing its hiring of engineers this year by 30%, a move falling right in line with a dire warning the company issued Thursday about its second-half expectations.
• Meta stock (META) is the worst performer among big-company Communications stocks Friday, down 3.4%. In 2022, it's now down 54% for the year.
• The company had said in its last earnings call that it would respond to slower growth with a corresponding cut in investments, particularly in its more future-focused bets that it houses in Reality Labs.
• Now CEO Mark Zuckerberg has put some numbers to that. In an employee Q&A session, he said Meta had previously planned to hire 10,000 new engineers in 2022, but that target's now down to 6,000-7,000, according to media reports.
• The economic situation is "one of the worst downturns we've seen," Zuckerberg said.
• It's not just new hiring feeling the pressure, either. Zuckerberg said he'd be "turning up the heat" on existing hires who may prove unable to meet more aggressive goals.
• "Realistically, there are probably a bunch of people at the company who shouldn't be here," Zuckerberg reportedly said. "Some of you might decide that this place isn't for you, and that self-selection is OK with me."
• The hiring-cut details add on to a warning issued by Chief Product Officer Chris Cox Thursday, saying that employees will need to prioritize "ruthlessly" and operate leaner and meaner: "We are in serious times here and the headwinds are fierce."

Comments

[kb9wnt]

"MySpaceBook".....

[coolcatnip]

Hire the best and brightest, trim the fat, inspire and renew a unified focus and we'll all be RICH!!...I'm pretty sure.

[kb9wnt]

Got to fire the engineers to make room for the "fact checkers"......

[my_symphony2003]

@kb9wnt fat checkers

[Seeking more alpha than you]

@kb9wnt personnel decisions are 100% up to them. Others get no input.

[grharbart201]

Time for them to wake up. Quit buying back their damn stock, put money in the bank. Than start the process of managing what they are all about. That is true for so many companies I can't count them. They must think buying back stock is the answer to everything. I hear the pundents on T V talking about not wanting to pay taxes , and the benefits of stock buy backs. Do you think I cared whether or not GE had 2billion 3hundred shares outstanding vz. 2billion 2hundred 75thousand shares? That is total stupidity. Besides that, who is going to pay taxes? The last administration lowered taxes for the corporations and they still just keep buying back stock. Not with my money.

[Gary J is Rich on AMZN]

@grharbart201

Pretty ironic they are talking about less hiring and cutting staff when employees are leaving in droves.

"Meta Facing Mass Employee Exodus, Will Limit Hiring in 2022https://www.extremetech.com › internet › 335210-meta...
May 9, 2022 — Meta's workforce (77,800 strong as of late March) seems to be hemorrhaging workers as people across various lines of business are choosing to ditch the company."

[Longbow Archer]

@grharbart201 "Quit buying back their damn stock"

No.

Buy back the stock. EV/FCF is 10x and FCF is growing. Buy back the shares.

[Seeking more alpha than you]

@grharbart201 it is 100% up to them whether they buy back stock or not. Others get no input.

[Observer7]

I am not a fan of Meta but I think reality will force them to lay off or fire the lazy, under-productive employees (thesis are largely the millennial, woke activists who have never felt they needed to be productive if they were busy virtue signalling)
Virtue signalling is hard work once you leave college.

[Longbow Archer]

"We are growing quickly: time spent on Reels overall has more than doubled year over year both in the US and globally, with 80% of the growth since March coming from Facebook.

Business Messaging will be the most important new opportunity to grow revenue — the key priorities here are click-to-messaging ads, paid messaging, and software and tools."

Chris Cox — Employee FYI

H2 2022 Investment Priorities

Open Source

[Gary J is Rich on AMZN]

@Longbow Archer

Why would anybody pay for messaging?

[Longbow Archer]

@Gary J is Rich on AMZN Do the research and report back.

[Gary J is Rich on AMZN]

@Longbow Archer I'll get right on that, Jr.

[Diesel]

They are only slashing *new hires* by 30% and market acts as if they are laying off 30% of their workforce. Classic.

They are still hiring and growing while many companies are implementing total hiring freeze or mass lay offs.

[Longbow Archer]

@Diesel It's a FUD cannon bombardment. Accumulating a FCF printing machine that is growing FCF at better EV is just one of those quixotic Mr. Market things.

Uncertainty does not equal Risk.

Who knows where the share price will be on New Year's Eve - that's uncertainty.

META has 30% FCF margin and 30% Profit Margin and 80% Gross Margin and nil debt and is buying back shares with increasing FCF - that is very low risk.

[MillionsDollarMan]

@Diesel total head count is being cut. Meta revenue is being cut massively as well.

[Just the Millionaire next door]

@MillionsDollarMan "Meta had previously planned to hire 10,000 new engineers in 2022, but that target's now down to 6,000-7,000, according to media reports." They are still hiring just not as many as planned.

[Rohl]

All those engineers can find luuuucrative jobs at some NFT projects. This is the future of tech.

[Blowback2]

@Rohl LOL! Thanks....

[Rinascimento]

Meta in Italian translates to aim, goal, destination.....I haven't followed stock and I don't know if just a coincidence of play of words or if applicable

[Investing For The Future]

@Rinascimento in Hebrew it has connotations with death.

[Rinascimento]

@Investing For The Future
Thank you for pointing this out; well, I think I can imply the same if management has problems with a mission statement for investors...let's hope for the best for investors; have a good 4th July weekend

[my_symphony2003]

@Investing For The Future Berg forgot his own language.

[V1001]

Facebook deleted my moms account. She's a church going conservative. Never even a big fan of Trump or anything. But some leftist employee must not have liked that and deleted her page. And they refuse to reinstate the account. 13 years of memories and photos a gone. This company can go to hell. filled with a bunch of sickos that hates half their clients. Yeah great business model. Who can even believe any numbers any of these companies even say anymore, the place is dying, it's like AOL of the past. People are moving on and leaving facebook in droves for other apps. And they deserve it.

[Username 47731613]

@V1001 like Instagram?

[Longbow Archer]

@V1001 "13 years of memories and photos a gone."

Part of any bullish investment thesis for Facebook has always been just how important Facebook is to people and this post proves it is no "myspace fad" but a very sticky product.

[Longbow Archer]

@Username 47731613 and WhatsApp.

[Cristi_an]

who the hell is hiring 10000 new engineers on top of existing ones?! They don’t even have that many new initiatives or new products!! These public companies they really know how to waste money on nonsense…

[c_hc]

@Cristi_an hiring target takes attrition into consideration

[Diesel]

FB is insanely profitable, generating $60 billion of cash flow from its operations. I am sure they know how to manage their resources just fine.

[Cristi_an]

@Diesel i think they can do better..that’s all

[Investor Hans]

Some people working at Facebook who shouldn’t be there? A CEO telling it in public while the people he is talking about don’t know anything is really bad. Every employee in the entire company will question their job and so a toxic culture has started. Glad I sold with a nice profit and won’t return.

[Cristi_an]

"Realistically, there are probably a bunch of people at the company who shouldn't be here," and how those people got there in the first place?
Just cut the spending on that metaverse… just do it today..

[Blowback2]

@Cristi_an Or…he could set an example…….

[ReMigration]

@Blowback2 : Thought the same…

[bkdk2]

It's an employers' market for the tech sector right now, golden opportunity for many of them to cut labor cost. For work at home posts, they can hire workers all over the world to find the best one with the least cost. Good news for quality tech stocks.

[Investor Hans]

@bkdk2 which best one around the world studied at the university of Zimbabwe? They all studied in western universities and plan to stay when they finished. Work and living conditions are better than their home country.
It isn’t that simple.

[DomL]

when do we see these cuts materialize and boost the stock ? 2023?

[beginner75]

Zucks is learning from Musk, use the opportunity to cut the laggards. A company that earns tens of billions a year in profit, needs to go on a cost cutting spree. What about those companies that aren’t earning much, and have got huge inventory and capital costs?

[Awatt127]

@beginner75 exactly,

[Investing For The Future]

Meta Platforms, formerly Facebook, is one of the most mismanaged companies I've had the pleasure of researching. Despite Zuck apologists, the CEO and those he hired for leadership positions have made an egregious amount of mistakes unheard of in the business community.

During a secular bull market, the company could absorb these mistakes and its competitive advantages served as a barrier from poor business performance. During a secular bear market, with worsening macroeconomic conditions, any mistake made by management and the company is exacerbated and leads to severe repercussions both in the near-term and in the long-term.

I am frankly amazed by how ludicrously stupid - there is no better word for some of the idiotic things they've decided to do, small and large - the decisions and announcements they make are.

Gentlemen and ladies, this isn't genius:

"Realistically, there are probably a bunch of people at the company who shouldn't be here," Zuckerberg reportedly said. "Some of you might decided that this place isn't for you, and that self-selection is OK with me."

This is desperation, inanity, and banality from a supposedly seasoned CEO who should know better, and act better. You don't first announce a company "re-brand," inclusive of name change and strategy / business / investment focus change and then within the course of a year start cutting back resources, $, and investment for that "new" focus of the company. It's a MAJOR RED NEON WARNING SIGN!

Do NOT invest in the company, definitely not yet! Wait and see until a new secular bull market begins. Had you listened to me back in the fall of 2021 you'd have avoided a 50%+ drawdown. Q3 / Q4 of 2022 and even likely Q1 / Q2 of 2023 will likely continue to have mixed results from the company with an increased likelihood of missed expectations.

[MillionsDollarMan]

@Investing For The Future Apple put the screws on Meta. The final blow is a ban on their Apps.

[Investing For The Future]

@MillionsDollarMan Would be curious to see if an outright ban of their apps occurs by Apple and Alphabet. Apple did threaten a potential ban in Sep 2021.

Personally, I believe Meta Platforms is doomed and won't recover from here on out; as a business, not necessarily as a stock, whose price may fluctuate accordingly. Time may prove me wrong, and I'm happy to acknowledge the facts if and when they occur, but man do I expect more from a FAANG company in terms of strategy, leadership, planning, and execution.

I could write a thesis on the number of mistakes FB / Meta has made that may be leading to its demise, if and when it occurs. I suspect it will be a decade long slow and painful decline into irrelevance.

[Cristi_an]

@Investing For The Future the fact they rebranded to something that is a fiasco, unproved product.. it just makes me cringe. Not sure who supported him in this “crybaby” delusional initiative…

[my_symphony2003]

Facebook needs to cut half of its employees. They really don't need that many people.

[beginner75]

@my_symphony2003 true, I’ve never understood why Twitter needs 7000 employees for an app a teenager can code.

[my_symphony2003]

@beginner75 you'll see layoffs everywhere, the money printing machine has been halted, everything will go in reverse.

[beginner75]

@my_symphony2003 temporarily halted.

[Moats and Income]

This stock will have a strong gain when Mark pulls the plug completely on reality labs. As an early adopter of VR, I can attest it’s a niche experience…will never be broadly adopted and used for any significant part of the day. Even among gamers, VR is niche. Mark shifted focus like a coward after the whistleblower hearings (didn’t even attend). Making dreams come true for Ready Player One fans will sink this once growing company.

[BigEarn]

META is a screaming buy and cutting costs is a good thing, but you’d never know it with sentiment and in this market. Long term holders, like myself however will be rewarded for not following the herd. It’s sad because SA used to be a place where like minded investors could go to educate themselves on stocks and areas of finance. Now most in the comments appear happiest when discussing politics and other topics that have nothing to do with making money. A bunch of snarky wanna be comedians. Loserville. Make SA great again. SMH.

[appledoc]

@BigEarn Bitter much? If you had listened to me back in February, I could have saved many of you from buying at $230. Or are you going to be one of those who argue that the entry doesn’t matter because you’re in it for the long term?

[wdchil]

@BigEarn META sure seems like a screaming buy and I recently added to my position (along with other "big tech" companies that seemed undervalued). We will know more after the Q2 reporting. Morningstar's "fair value" for META is $384, but it could get downgraded if there is unexpected revenue weakness. On the other hand, share buybacks could be very beneficial at these levels. WD

[MillionsDollarMan]

@appledoc I warned people at $360. lol