For the first time ever, Meta—the parent company of Facebook, Instagram, and WhatsApp—plans to reduce its headcount and cut budgets across most teams.
Why it matters: The move to downsize marks a clear break from nearly two decades of yearly growth for Meta as new competitors like TikTok cut into the company’s advertising business.
- Meta’s stock price has fallen almost 60% since the start of the year as its advertising business slows down.
- Another source of worry for investors: TikTok’s users are spending ten times more hours on the platform than Instagram Reels users, raising questions about the future of Meta’s social media platforms.
What’s next: Meta is trying to grow and monetize Instagram Reels to keep its ad business competitive, but the company is really staking the future of its business on the Metaverse.
That could be a home run if the concept lives up to the hype, but it’s a risky gamble for investors to make right now as the company’s losses pile up.