Meta reported a decline in its quarterly revenue for the second time in its history as a public company, prompting it to take significant steps to reduce costs.

The decline in the company’s revenue comes as it deals with the ongoing economic downturn and Apple’s changed advertising policy, both negatively impacting the company’s advertising business. At the same time, CEO Mark Zuckerberg’s bet on the metaverse is driving down the company’s profitability as it struggles to monetize it and drive usage.

“We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company,” Zuckerberg said.

The company’s stock fell nearly 17% in after-hours trading following the results.

The company reported nearly $4.4 billion in net income, 50% less than what it made during the same period last year. The decline in net income came along with a slowdown in user growth, with TikTok continuing to eat Meta’s lunch. At the end of the quarter, the company had 2.96 billion monthly active users on its Facebook app, just a 2% year-over-year increase. Meanwhile, overall daily active users on the company’s family of apps rose by 4% to 2.93 billion, down from 11% observed during the same quarter last year, CNN reported. WhatsApp, for one, has over 2 billion active users, while Instagram has more than 2 billion monthly active users.

But it’s not just rising competition from TikTok that is impacting Meta’s core business. Zuckerberg’s push toward selling his vision of the metaverse has cost the company dearly, with Meta spending $9.4 billion on its Reality Labs division so far this year. And this has the company’s investors worried.

Meta shareholder Altimeter Capital reportedly called on Zuckerberg to limit its investment in metaverse to no more than $5 billion annually and asked the company to reduce its headcount by at least 20% and its expenditure by $5 billion.

The company now trades for less than one-third of its five-year average and is just worth half as much as Berkshire Hathway. This has come along with a decline in the company’s market cap, which now lags behind players such as Bank of America, Chevron, UnitedHealth, and Procter & Gamble.

In response, Meta is seeking to make significant changes across the board to improve its efficiency, starting with shrinking its physical footprint and reducing its headcount. As a result, the company expects its headcount by the end of next year to be roughly around 87,314, the same as what it reported at the end of September.

“We are holding some teams at in terms of headcount, shrinking others and investing headcount growth only in our highest priorities,” Meta’s finance chief David Wehner said.

While these changes might be a step in the right direction, perhaps Meta should reassess market demand for its version of metaverse — if it’s something consumers genuinely want and need and if its vision needs a course correction.