Completely agree.

> Large corporations are insane. Every small and medium company would wait to do layoffs until it threatened the business. Some even until after that point

This is super idealized. How many layoffs have been going on in startup land recently?

You mean teeny tiny cutesy startups like Stripe and Twilio?

Look at the companies on http://layoffs.fyi

Lots of small and medium sized companies, and I know for some that it was not their last move before going under.

We had a hiring boom driven by cheap money, which is now ending. Now we get the inverse.

Has nothing to do with insane large corps and saintly SMBs.

While I agree it's very idealized, a lot of those startups probably are legitimately financially threatened in the immediate term in a way that Meta most certainly isn't.

It is absolutely idealized.

They are laying off people because the value of the company just tanked 70% in a few months. The value of a company contains all the future estimated discounted earnings, the trend of earnings matters more than current earnings. The actions of a company is determined by what its shareholders want, which is to maximize stock price, not be satisfied with X billions in profits when the stock is down 70%. The actions of companies will remain a mystery to people who do not understand this.

Well, yeah. But I think that mechanism is pretty awful.

Yeah it's awful, but that's life. FWIW I have family working at Meta so I'm not just being callous.

The value of a company contains Lalaland logic, as Tesla, Toyota and GameStop prove.

The link between actual business logic and company valuation broke down around 2010.

Small companies don't pay over 200k + perks for someone who just graduated

SFBA companies do, actually.

Trading firms are small companies, and most of us definitely pay that (sometimes a lot more) to new graduates.

They lay people off, because companies always want to lay some people off, and doing so in normal times is even less palatable. Employees are not fungible, and some employees are worth to companies less than the company wants.

This is not to say that every single person being laid off is of low value, that’s not true. It’s just it is hard to lay off only low performers, some average or even good performer will always be collateral damage. But, overall, if you want well-performing companies to not do mass layoffs on recession, the only way is to make it more palatable to people to see mass firings in good times.

> FB is making $30+bn a year profit, and is laying off people to reduce costs by $2b. They could continue to pay these people.

The quarterly revenue was about $27bn but net profit $4bn, so you're off by a factor of 7 or more on the estimate. R&D expenses alone are $9bn, and the largest operational expense is employee comp, by a LOT, distant second being data centers. For added measure, they also reduced real estate footprint along with the 11k employees.

The company has also essentially doubled in size every year since ~2013, and that was certainly encouraged by false positives in terms of future projections when the pandemic hit. So this is really not surprising, and a major cost-saving function for them.

Mmm, I was looking at 2021 profit. Anyway, 16b a year is not a factor of 7 off from 30b.

Yeah 2020-21 was wild. Revenue is not profit, though.

7.4% of profit (2/27) versus 50% of profit (2/4) was the factor of ~7 parent was referring to.

Granted these are comparing annual cost versus quarterly figures, but the overall narrative still stands.

> R&D expenses alone are $9bn

Are RSUs included into this number?

why would RSU (a comp element) be included in R&D spending?

Because r&d spending at tech companies means engineers and product.

In the last four quarters FB's reported profit went from $10B to $7.5B to $6B to $4B. The business is threatened.