To The Moon

$Meta Platforms, Inc.(META)$'s announcement of a 5% workforce reduction has certainly caught attention. The company, led by Mark Zuckerberg, is shifting gears ahead of what it predicts will be an "intense year." The decision to "move out low performers faster," as Zuckerberg described it in an internal memo, signals that Meta is tightening up and preparing for a more efficient future. However, while this may seem like a necessary adjustment for a company at the scale of Meta, I have some reservations about whether these cuts will genuinely address the issues they hope to solve. In fact, I believe these layoffs could miss the mark when it comes to eliminating "dead weight."

It’s no secret that in any large organization, there will be employees who don’t contribute at the level the company needs or expects. Whether it’s due to mismatched roles, lack of skill development, or even lack of motivation, there’s often a certain percentage of “dead weight” in the workforce. This is particularly true in industries like tech, where rapid changes in technology and job functions can leave some employees struggling to adapt.

Meta, with its massive workforce of over 72,000 employees, is no exception. A 5% reduction, while not trivial, is unlikely to be the end of the story when it comes to improving efficiency. It's easy to assume that the company could trim some fat and become more streamlined. But the reality is much more complex. In my view, Meta’s approach to layoffs may not tackle the root causes of inefficiency as effectively as it could.

META Weekly Chart forming a rising wedge pattern

Meta, like many other tech companies, is making a concerted push into artificial intelligence. AI could play a significant role in helping the company improve operations. In fact, AI may soon be able to do many of the tasks currently handled by human employees—possibly even better than humans can. So, while there is certainly a portion of the workforce that isn’t pulling its weight, AI could be the key to optimizing these roles.

In this context, these layoffs could be a stepping stone to retooling Meta for the future, where AI helps both employees and the company as a whole become more efficient. Some employees who might have been considered “low performers” may have had jobs that could be automated or streamlined with the right tools. Instead of layoffs, Meta could focus on upskilling employees to leverage AI, turning potential "dead weight" into powerful assets for the company.

The crux of my concern is that these layoffs won’t truly be about individual performance; rather, they will be based on an employee’s position within the organizational chart. As Zuckerberg mentioned, Meta will be "moving out low performers faster," but the criteria for performance seem somewhat vague. Instead of targeting inefficiency at the individual level, Meta's cuts will likely come down to structural positions within teams or departments.

This kind of layoff strategy rarely results in meaningful reductions of inefficiency. It simply removes people from roles, often without regard for their unique contributions or the context in which they were underperforming. It’s not a performance-based decision; it’s an organizational move. Some employees may have been in a less impactful role due to factors beyond their control—such as lack of support, unclear expectations, or simply being in the wrong place at the wrong time. This is not a fix for dead weight.

WFH has further complicated the issue of performance measurement. Remote work, while beneficial in many ways, has made it easier for employees to coast. Without clear and immediate oversight, some individuals may not feel the pressure to perform at their highest level, which can increase the amount of "dead weight" within an organization. For companies like Meta, where a significant portion of the workforce has been working remotely, there is a risk that performance could be diluted in ways that aren’t easily visible.

These layoffs, however, won’t necessarily address this issue. Simply cutting 5% of the workforce will not address the underlying structural problems that may have allowed inefficiencies to proliferate during the shift to remote work. If Meta truly wants to address performance gaps, a more tailored approach to performance management and skills training might be necessary, rather than simply removing people.

Looking forward, the role of AI in reducing "dead weight" cannot be overstated. While Meta's current layoffs may seem like a way to streamline operations, the real future of efficiency lies in AI-powered automation. Instead of eliminating people, Meta should be focusing on how technology can support its workforce, improve overall performance, and address the issue of “dead weight.”

In fact, many of the roles affected by these layoffs could be replaced by AI in the future, which will enhance the abilities of non-deadweight employees rather than making them redundant. If Meta’s leadership truly wants to improve efficiency, they should shift their focus to implementing AI tools that allow all employees—whether performing at peak or struggling—to contribute more meaningfully.

Meta’s 5% workforce reduction is a short-term solution to a long-term problem. While trimming the fat might seem like a good way to improve efficiency, it doesn't solve the root causes of inefficiency in a large organization. Furthermore, without a focus on skills development and leveraging AI, these layoffs may not have the desired effect in the long run. Meta is in a transitional phase where new technologies, like AI, are poised to reshape the workforce. Instead of cutting employees based on an outdated performance management system, Meta should be exploring ways to empower its staff with the tools and skills needed for the future.

What do you think? Will these layoffs make Meta leaner, or will they miss the mark in addressing the real issues?

Let me know your thoughts!

@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @TigerSG @TigerEvents

Disclaimer: This is a general stock analysis and not financial advice. Always conduct your own research before making any investment decisions.