We’re Not Done With Layoffs Yet As Meta, Disney And Amazon All Make Further Cuts

Key takeaways

• Meta, Disney and Amazon have all made headlines this week as the highly anticipated job cuts hit workers across multiple divisions
• Meta and Disney’s stock prices dipped while Amazon gained very slightly
• More layoffs not off the table as economy worsens

Meta, Disney and Amazon have forged ahead with their mass layoffs rounds this week, with some workers finding out on Wednesday that their jobs were gone. The departments affected range from advertising to on-air presenters, with no stone left unturned and workers feeling the pressure.

Wall Street was largely indifferent to the news, but it wasn’t the same positive reaction big companies enjoyed when the news first broke. Let’s look at the latest layoffs news, why Wall Street isn’t impressed and whether more layoffs are on the cards.

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What’s the latest with layoffs?

All three companies had previously announced the layoffs in the last few weeks, but the details on which departments would be affected have been hazy until now.

Meta

Let’s start with Meta, the first Big Tech company to announce a second mass layoffs round totalling 10,000 workers. This is on top of the 11,000 employees whose jobs were cut in the autumn of last year.

On Wednesday reports started to emerge of Meta’s engineering and tech teams being affected by the layoffs, including machine learning engineers and UX researchers. It’s believed 4,000 roles were cut in total on Wednesday of the 10,000 announced, with more business operations roles will be lost next month.

Disney

The Mouse House has begun cutting on-air talent and management roles at ESPN as part of CEO Bob Iger’s $5.5 billion restructuring plan to turn around the ailing conglomerate. The number of layoffs isn’t known, but Disney has previously announced that the total figure from the layoffs round would be roughly 7,000. It’s already cut jobs in its metaverse division and international offices.

As for Disney itself, employees are bracing themselves for news next week as the film and TV departments are set to be next in the firing line. Disney will release its Q1 earnings report in May, where ESPN will have its own figures published for the first time.

Amazon

Rounding off the trio, on Tuesday this week Amazon said it was making cuts in its advertising division. There’s no confirmed figure yet on how many roles were affected. The move comes after 100 job losses were announced in Amazon’s video gaming department and other layoffs were set to take place in retail, recruitment and HR.

Amazon’s senior vice president of advertising, Paul Kotas, was the one to break the news. He said in an internal memo the department’s layoffs “involved reallocating resources by shifting team members, slowing down or stopping certain programs, or concluding we didn’t have the right skills in place to address our priorities”.

What was the market reaction?

Some have previously accused Meta CEO Mark Zuckerberg of pandering to Wall Street and Meta’s share price with the layoffs, while others have praised the move as an effective cost-cutting measure. Meta’s stock has surged 72% since the start of the year, but this time, it wasn’t a positive reaction for the Wall Street darling: Meta’s share price was down 1.2% on Wednesday.

The other two didn’t fare much better. Disney was down 0.4% in pre-market trading. The biggest winner was Amazon, with a 0.3% share price increase on Wednesday at the news.

It’s an interesting turn of events given most major companies were rewarded with a stock price bump after announcing their layoffs. As more details emerge on where those cuts are happening, it’s possible that investors see the wood for the trees and are pricing accordingly.

Could we see more layoffs?

While further layoffs haven’t been ruled out, there’s a fine line for company leaders to balance morale with cost-saving measures. Meta employees have allegedly begun to speak out about the layoffs and how they’ve “shattered morale and confidence”. We’ll start to see if Zuckerberg’s so-called ‘year of efficiency’ is starting to bear fruit with Meta’s Q1 earnings due next week, but he might not need to do anything else if disgruntled staff are walking themselves out the door.

The real decider will be whether companies want to reduce their advertising spending further. With the economy declining and inflation still high, businesses have either slashed their ad budgets or want more bang for their buck. Meta saw a 4% drop in advertising revenue in the last quarter of 2022

Then the squeeze on household earnings leaves the ‘nice to haves’, like TV packages, getting the ax. Disney knows this all too well, having missed its profit and revenue targets in its Q4 earnings thanks to losing Disney+ streaming subscribers. The share price fell 8% at the time.

In short, more layoffs are not off the table, but a few different factors affect the decision. We’ll know more once these companies’ Q1 reports are released.

The bottom line

It’s fair to say these companies are feeling the pressure. Q1 earnings season will be very telling on who’s mass layoffs have actually made a difference or whether the continued household spending and advertising drops are still causing misery for company profits – because firing thousands of people is not a decision to make lightly.

The likes of Meta, Disney and Amazon aren’t just laying off workers – they’re scaling back projects, scrapping office space and merging whole divisions in a bid to save money. Wall Street is closely watching to see how these measures play out, which makes earnings season even more hotly anticipated by the experts.

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