Will Mark Zuckerberg's Layoff Plan Restore Meta Investors' Confidence? Analyst Says It 'Still Doesn't Make Up For…'

Meta Platforms Inc. (NASDAQ: META) rumored job cuts will be publicly disclosed on Wednesday, and Loup Funds’ Gene Munster offered his take on how effective the eliminations will be in helping the company get back on track.

What Happened: Meta is likely to reduce 10% of its headcount, equating to about 8,700 jobs, helping the company save about $2 billion a year, Munster tweeted. Operating expenditure will stand reduced by about 3%, he said.

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The estimated cost savings, according to the venture capitalist, "still does not make up for" the $10 billion outgo the company has earmarked for its metaverse project or Reality Labs spending.

“While it’s a start to expense control, it’s not enough to win back investors,” Munster said.

Over time, the Loup Funds Managing Partner sees either the metaverse getting traction or the company resorting to more headcount reductions late in 2023 and 2024.

Why It’s Important: Meta’s problems are not limited to its lavish metaverse spending plans. Shrinking ad dollars amid the macroeconomic uncertainty and Apple Inc.’s (NASDAQ: AAPL) privacy policy changes and competitive pressure from TikTok, all continue to pressure the company’s topline.

But what irked investors following its third-quarter results is CEO Mark Zuckerberg’s mention of plowing in more money into its metaverse quest, which isn’t likely to bear fruit any time soon.

Operating challenges are not specific to Meta alone, as microblogging platform Twitter under its new owner Elon Musk has let go almost half of its workforce.

Meta closed Tuesday’s session down 0.26% at $96.47, according to Benzinga Pro data.

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