Facebook plans to reduce hiring as revenue growth slows and inflation concerns increase

Facebook co-founder and CEO Mark Zuckerberg testifies before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill October 23, 2019 in Washington, DC. Zuckerberg testified about Facebook’s proposed cryptocurrency Libra, how his company will handle false and misleading information by political leaders during the 2020 campaign and how it handles its users’ data and privacy.

Facebook parent Meta is slowing the pace of hiring as it reckons with its weakest revenue growth on record and ongoing business challenges, such as Apple's privacy changes and the war in Ukraine.

A Meta spokesman told CNBC in an email on Wednesday that the company is slowing its growth due to the expense guidance given for this earnings period.

Meta forecast a revenue drop in the second quarter in its earnings report last week. CFO David Wehner highlighted several issues facing the company, and said expenses would be between $87 billion and $92 billion, down from a previous forecast of $90 billion to 95 billion.

A person familiar with the company's plans says Meta will stop or slow hiring for most midlevel and senior-level roles after holding off on adding entry-level engineers. The person said that recruiters were pausing their efforts to fill certain roles.

Insider reported on the plans, citing a memo from Wehner.

Users abandoned Facebook's apps last year. In February, Meta said its daily active users had declined for the first time in the fourth quarter, but that number had rebounded in the first quarter of 2022.

The digital media business is taking a hit due to macroeconomic concerns.

After the start of the Ukraine war, we experienced a further deceleration in growth due to the loss of revenue in Russia as well as a reduction in advertising demand both within Europe and outside the region.

Wehner told investors that the privacy changes Apple instituted last year will hurt growth, after the company had already predicted the move would reduce revenue by $10 billion.

The Federal Reserve raised its benchmark interest rate by half a percentage point on Wednesday to address a 40-year high in inflation. The markets moved higher as Fed Chair Powell indicated that the central bank is unlikely to impose bigger rate hikes in the future.

Facebook shares ended the day 5% higher, but are still down 34% for the year.

Jim Cramer said he would buy shares of Facebook after the earnings beat.