Meta says it's laying off staff and easing off hiring to reduce costs – but will keep pumping billions into Mark Zuckerberg's metaverse

Executives said that Meta will keep pumping billions of dollars into its metaverse projects even though it is cutting hiring and laying off workers.

In Meta's third-quarter earnings call, CFO David Wehner said he expects hiring to slow dramatically. We are holding some teams flat in terms of headcount, shrinking others, and investing headcount growth only in our highest priorities.

Between now and the end of the year, Meta expects its headcount to stay the same. According to the company's third-quarter earnings report, the company had 87,314 employees as of September 30.

Some Meta employees told Insider that they were worried about layoffs, and that some staff had begun making contingency plans.

There were 3,700 net new hires in the third quarter, compared with 5,700 in the second quarter. Susan Li, Meta's VP of finance and incoming CFO, said that new hires were mostly in technical and senior roles.

Meta's metaverse will keep burning cash

Meta's net income plummeted to $4.4 billion in the third quarter, and its operating margin plummeted to 20%. As it reported its second consecutive quarter of falling revenue, the company announced a number of measures to cut costs.

Changes are being made to operate more efficiently. Reducing its office footprint was one area in which the company had increased scrutiny.

Third-quarter revenue for Reality Labs, the division that houses its metaverse and virtual-reality businesses, was almost half of what it was a year ago. Wehner attributed the lower sales of the headset to the fact that it was a virtual reality headset.

Reality Labs has reported $9.4 billion in operating losses so far this year.

The biggest drivers of the division's expenses will be the launch of a new Quest headset and the first full-year salaries of staff hired this year.

Reality Labs' operating losses are expected to grow significantly in the years to come. We expect to pace Reality Labs investments in order to achieve our goal of growing company operating income in the long run.

The company is headed in a good direction, according to the founder.

Wall Street has been pressuring Meta to reduce spending. On Tuesday, the CEO of Altimeter Capital, which owns hundreds of millions of dollars' worth of Meta shares, urged the social-media company to cut back on its metaverse investments.