Unexpected Twist: Meta’s Multi-Billion Expenditure Linked to Office Shutdowns and Layoffs Uncovered

Last year, Meta lost $16.1 billion on its “Reality Labs” division, which makes products like the Oculus goggles. This is up from a loss of $13.7 billion in 2022.

These losses are also accelerating: in the fourth quarter of 2023, Meta lost $4.6 billion on the Metaverse.

There is more to come, Zuckerberg promises investors: “For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem,” Meta said in its most recent earnings release.

However, this time around, investors appear to be completely comfortable with Zuckerberg’s Metaverse investments. Meta’s stock, which was already at an all-time high, increased by almost 12% in response to the announcement.

What’s going on?

Here’s a simple answer: For starters, Meta claims it will continue to buy back its stock, which Wall Street likes, and will begin paying dividends to shareholders for the first time in its history.

Unexpected Twist: Meta's Multi-Billion Expenditure Linked to Office Shutdowns and Layoffs Uncovered

But the greater story is that Meta has spent the previous few years driving people out the door, getting out of leases, and so on. This has boosted the company’s bottom line, despite the fact that Meta is losing money in the future.

Last year, Meta spent $3.5 billion to shrink itself. $2.5 billion of that came from “facilities consolidation” — closing and consolidating offices — and another $1 billion from “severance and other personnel costs” – terminating employees. The corporation presently has 67,300 employees, a startling 22% reduction over the previous year.

All of this means that Meta’s profit margins are significantly higher. While its revenues grew by 16% (a figure that most Big Tech companies would be pleased with these days), its operating income jumped by 62%, and its profits increased by 69%.

See also  Juan Soto’s $765M deal with the Mets is the largest in MLB history. Here’s who he passed

And, while Zuckerberg and other Big Tech leaders have stated that they have been cutting to make their companies more efficient and dynamic, those bottom-line results are critical: They want to demonstrate to Wall Street that they can still increase profits — even if their go-go growth days are over and they are still investing in new products.

Leave a Reply

Your email address will not be published. Required fields are marked *