Monday's Headlines: Large Layoffs Expected at Meta

Monday's Headlines: Large Layoffs Expected at Meta

Here were the biggest movers in the MyWallSt shortlist on Friday:

Moving Up ⬆️

BlackLine (BL) +18.0%

Block (SQ) +11.5%

Chuy's (CHUY) +9.8%

Starbucks (SBUX) +8.5%

IMAX (IMAX) +8.4%

Moving Down ⬇️

Copart (CPRT) -49.4%

Twilio (TWLO) -34.6%

Atlassian (TEAM) -29.0%

DraftKings (DKNG) -27.8%

Cloudflare (NET) -18.4%


Ryanair Isn’t Concerned About a Recession 🛫

Shares of Ryanair are up about 3% today after management painted a rosy picture for its future. The budget airline has upped its passenger target for 2022 to 168 million from its 166.5 million goal earlier this year. It also expects earnings to top €1 billion for 2022 as the rebound in travel post-COVID shows no signs of slowing down, in spite of growing macro concerns.

CEO Michael O’Leary has cited the company’s strong bookings through to next Summer, and while the likelihood of a recession looms, he sees travelers opting for value air-fares rather than forgoing their holidays. “What’s unusual is this time I think we’re going into a recession with full employment. People do seem to be spending and they’re certainly traveling.”

This is evidenced by Ryanair offering 10% more seats this winter compared to 2019 levels while many European competitors are looking at cutting capacity. One concern for the business revolves around suppliers, with O’Leary questioning whether its order of 51 new Boeing 737 Max jets will be delivered in time to meet next summer’s demand. “There’s real doubt about whether we’ll get the last five or 10 of those aircraft in time for the June-July-August peak. We really won’t know until February or March.”


Large Layoffs Expected at Meta Ⓜ️

Meta, the parent-company of Facebook, is expected to announce large layoffs this week according to reports.

Many thousands of workers are expected to be impacted as the company struggles to cut costs. It could be the largest such round of layoffs seen in the technology sector. The company announced 87,000 employees at the end of September.

It comes just a week after Elon Musk announced plans to dramatically reduce the headcount at newly-acquired Twitter. Should the reports prove true, it will be the first time the company has made such a broad round of job cuts.

Meta, like many technology companies, hired aggressively throughout the COVID-19 pandemic as demand for e-commerce rose. Earlier this year, the company admitted that it would have to reduce costs and that layoffs could play a part in that. In June, CEO Mark Zuckerber said, “realistically, there are probably a bunch of people at the company who shouldn’t be here.”

Shares of Meta are currently down 73% year-to-date as investors worry about excessive spending on new products and a decline in its core advertising business. A year ago, the company rebranded to Meta Inc. in order to highlight its new focus on virtual and augmented reality, broadly termed “the metaverse”. Meanwhile, changes to tracking on iOS devices and the increasing popularity of TikTok has dented the company’s advertising revenue.


Apple Hit With More Supply Chain Issues 🍎

Apple has warned investors that production delays could hamper its holiday season. The company has said that lockdowns in China will impact its production of its high-end iPhone 14 Pro and iPhone 14 Pro Max.

On Sunday, the company warned that an assembly factory in Zhengzhou is operating at reduced capacity. It comes as China continues to adopt a zero-COVID policy that has seen severe restrictions on travel and increased use of lockdown measures to halt the spread of the virus.

“We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products,” the company said.

Apple’s largest supplier, Foxconn Technologies, has struggled to keep factories operating at full capacity. The company said last week that one of its factories in Zhengzhou, known as iPhone City, was forced to shut for a week after an outbreak of COVID-19. The company has said it is working closely with government officials to limit the lockdown measures and return to full production.

Companies such as Tesla have also been hit with production delays in the region over the past few months.

Apple stock is currently down 24% year-to-date and down 1.3% in premarket trading.

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