Facebook (FB) is preparing for difficult days ahead.
The social media giant has just taken steps to reduce its costs in anticipation of the slowdown in growth predicted by many economists. The firm, which renamed itself Meta Platforms last October, has just decided to change its hiring policy.
Meta plans to halt or in some cases slow hiring for most mid-to-senior level positions, a source told TheStreet. This follows the recent pause on hiring early-career engineers a couple of weeks ago.
The goal is to revise priorities and align hiring targets with current market estimates and pacing, the source said.
"We regularly re-evaluate our talent pipeline according to our business needs and in light of the expense guidance given 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 long-term impact.”
Last month, the Facebook parent said profits for the three months ending in March were pegged at $2.71, down 17.9% from the same period last year but firmly ahead of the Street consensus forecast of $2.56 per share.
Group revenues, Meta said, rose 6.6% to $27.908 billion, nearly all of it coming from the new 'Family of Apps' division the company created last year, missing analysts estimates of a $28.2 billion tally. Ad revenues were up 6.1% to $27 billion.
Facebook Slows and Halts Hiring
After suffering its first-ever decline in daily active users last quarter, Meta said the figures rose 4% from last year at 1.96 billion, just ahead of the Street consensus of 1.951 million, suggesting the social media group has been able to offset the market share gains of China-based TikTok with both its Facebook and Instagram apps.
Faced with this not very optimistic picture, Facebook anticipates that hiring fewer people this year than it previously forecasted will put the firm in a stronger position in the future, the source said. Having this level of discipline on expense management is good for its business overall.
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 review their marketing budgets. The reopening of the economy also affects online advertising.
Facebook also warned in January that it anticipated $10 billion in lost revenue for 2022 because of the in-app tracking blocked by Apple device users.
After two very strong years where much more activity and commerce moved online due to the pandemic, activity is now increasingly shifting back offline, the source said. Therefore, Facebook anticipates a softening of business performance across the industry, including as a result of iOS changes affecting the entire online ads industry and the war in Ukraine.
Meta recruiters have begun pausing tech screens and interviews for some roles, outside of a few exceptions.
However, the company does not plan layoffs at this time, the source added. This is a pivot to the previous aggressive growth targets set at the beginning of the year. Facebook added over 5,800 net new hires in the first quarter, the majority in technical functions.
Mark Zuckerberg's company ended the quarter with over 77,800 full-time employees, up 28% compared to last year.
Facebook is currently focusing on the metaverse, a virtual world in which we are called upon to interact via avatars and with the help of technological tools such as virtual reality headsets.
