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Meta Platforms (NASDAQ:META) Leans on Staff Reduction to Curb Costs
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Meta Platforms (NASDAQ:META) Leans on Staff Reduction to Curb Costs

Story Highlights

Meta Platforms is leaning on staff reduction to curb 10% of costs. The company is reallocating employees within departments to reduce terminations.

Technology behemoth Meta Platforms (META) is reportedly leaning on staff reduction to cut costs by 10% in the coming months, a WSJ report stated. Notably, the company is expected to undertake cost-cutting initiatives by curbing overheads. However, a major portion of the savings is expected from reducing headcount. Following the news, META stock hit a new 52-week low of $142 on September 21.

The company is undertaking a reorganization of staff and has granted certain employees a limited time frame to reapply for other jobs in the company. At the end of the time frame, those who are unable to find a suitable position would be asked to leave, sources said. This has been a long-used strategy at Meta Platforms to reallocate talented employees while ensuring headcount adjustment.

The parent company of social media platforms like Facebook and WhatsApp is struggling to gain momentum amid growing competition and slowing user engagement. Moreover, rival Apple’s (AAPL) iOS privacy changes, diminished advertising spending, and regulatory hurdles are further pressuring the company’s performance.

The cost-cutting initiatives took effect soon after Meta CEO Mark Zuckerberg announced in July this year that the company would need to prioritize business operations and align staffing.

Similarly, last week, rival Alphabet (GOOGL) (GOOG) also took the harsh decision to lay off approximately half of its employees in the new project Area 120. Google has given 90 days to the staff to look for replacements in other departments.

Is META a Good Stock to Buy?

Wall Street analysts are cautiously optimistic about Meta Platforms. On TipRanks, META stock has a Moderate Buy consensus rating based on 27 Buys, five Holds, and two Sells. Nonetheless, the average Meta Platforms price target of $223.70 implies an impressive 57.4% upside potential to current levels. Meanwhile, amid the current unfavorable macroeconomic backdrop, META stock has lost 58% so far this year.

Ending Thoughts

The technology sector is one of the hardest-hit victims of the recent economic downturn. Meta Platforms is trying to skirt the increasing cost pressures by undertaking headcount reductions and curbing overhead expenses.

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