The owner of Facebook, Instagram and WhatsApp, Meta, is set to take a $4.2bn charge in the fourth quarter for costs associated with cutting office-space leases, redesigning data center projects and severance for laid-off workers.
Another $1bn restructuring charge is expected for 2023.
Meta, formerly Facebook, is taking drastic measures to cut costs and reshape the business in order to appease investors and address the plummeting stock price.
The $4.2bn "restructuring charge" is a result of these efforts, with Meta taking an early termination fee on some office leases, as well as investing more in building its own data centers.
The company is also expected to take a hit due to severance payments for laid off employees.
As BBC News reported, "Meta is scaling back some of its more ambitious projects, including developing virtual and augmented reality hardware" as a part of the restructure.
The company's CEO, Mark Zuckerberg, recently announced his intention to transition the social media platform's focus from public posts to private messaging and groups, a plan that's seen as cost-effective.
"By emphasizing private messaging and groups over traditional posts on the platform, Zuckerberg hopes Meta can create more intimate communities that will prove appealing to users," CNN said.
While Meta is facing significant restructuring costs and narrowing its focus, its stock has performed unexpectedly well in recent months.
"Meta shares have rallied recently, rising about 25% this year despite sluggish user growth and slowing ad revenue," The Wall Street Journal noted.
However, the $4.2bn charge and additional restructuring costs for 2023 reflect the significant challenges faced by the social media giant in adapting to changing user habits and investor perceptions.