Two of the NASDAQ Composite’s best performers the last several years are putting in mixed performances early Monday with investors indicating their preference of cost-cutting moves versus lower production and sales.
During the pre-market session, Meta Platforms is adding 2.6% after the Wall Street Journal reported that the Facebook parent was preparing to announce large-scale layoffs this week. Meanwhile, Apple shares are sliding about 1.8% in the pre-market after it said COVID-19 restrictions are hindering iPhone production at the Foxconn factory in China. That factory is the world’s biggest iPhone production site.
For whatever reason – higher interest rates, low advertising or losses tied to disappointing results from the Metaverse – Facebook parent Meta could begin large-scale layoffs as soon as Wednesday, according to a report from the Wall Street Journal. And the price action indicates investors are embracing the news.
The Wall Street Journal is reporting that the layoffs are expected to impact thousands of employees, and the move would mark the first major headcount reduction in Meta’s history. At the end of September, the company reported that it had more than 87,000 employees.
A Meta spokesperson declined to comment and referred CNBC to Zuckerberg’s comments on the company’s latest earnings call last month.
“In 2023, we’re going to focus our investments on a small number of high priority growth areas,” Zuckerberg said at the time.
“That means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”
Meta shares have plummeted 73% this year, falling to their lowest since early 2016, and the social media giant is now the worst performers in the S&P 500 in 2022, CNBC reported.
Apple iPhone Production Hurt by COVID Restrictions
Apple said in a statement on Sunday that it has temporarily reduced iPhone 14 production because of COVID-19 restrictions at its primary iPhone 14 Pro and iPhone 14 Pro Max assembly plant in Zhengzhou, China.
The factory, operated by Foxconn, is operating at “significantly reduced capacity,” Apple said. It warned that it would ship fewer units and that customers would experience longer wait times when ordering devices.
Apple’s warning brings up the possibility that it may sell fewer iPhones in the December quarter because it is having trouble making enough to meet demand. It previously signaled slowing growth in the December quarter last month, CNBC reported.
Mixed Signals and NASDAQ Volatility
Monday’s price action in Meta and Apple could be the triggers of a fresh round of volatility in the NASDAQ Composite Index. We could start to see friendly-to-bullish price action fueled by massive layoffs from several major tech names in response to the Fed’s aggressive interest rate hikes. Then again, gains could be capped and prices could retreat if the major tech firms start to announce slowdowns in production or lower sales.
Read More: NASDAQ Composite’s Mixed Performance Tied to Meta’s Strength, Apple’s Weakness