Meta’s Reality Labs suffered heavy losses in the third quarter of the year and hemorrhaged nearly $3.7 billion.
Meta Still Struggling With Metaverse Dreams
Reality Labs, which is the division responsible for carrying out Meta’s metaverse-related technology, has continued to bleed funds even well into the third quarter of 2022. The branch had already chalked up losses of $2.9 billion and $2.8 billion in the year’s first and second quarters, respectively. On an earnings call this week, other numbers were revealed. The company’s overall earnings have also dropped to $5.7 billion in this Q3, as its earnings per share fell short of the expected $1.89 at just $1.64.
Addressing the losses for Reality Labs, Meta CFO David Wehner released a statement saying,
“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”
CEO Zuckerberg Talks Meta’s Future
Additionally, the company also suffered a slower income rate from its family of apps division, which includes Facebook, Instagram, Messenger, and WhatsApp. Despite recently introducing the cross-posting NFT feature across Instagram and Facebook, the Q3 earnings of the apps division are down 28% since last year, with an income of $9.3 billion during the quarter. Compared to Meta’s earnings in the Q3 of 2021, the net income dropped down 46% to nearly $5.7 billion.
Meta CEO Mark Zuckerberg addressed the matter on the earnings call, claiming that the company is working on multiple avenues to explore the metaverse, including a social metaverse platform complete with avatars, augmented reality, and neural interfaces.
He said,
“I get that a lot of people might disagree with this investment. But from what I can tell, I think this is going to be a very important thing, and I think it would be a mistake to not focus on any of these areas, which I think will be fundamentally important to the future.”
Shareholder Urges Limiting Metaverse Investment
He could be referring to the comments of Altimeter Capital CEO Brad Gerstner, who had recently penned an open letter addressing the Meta CEO. In the letter, Gerstner has urged Zuckerberg to streamline and focus its path forward, claiming that the company has drifted into the land of excesses. He presented his ideas encompassing a three-pronged plan of action for the company’s future: reducing headcount expenses, reducing annual capital expenditure, and significantly limiting investments in the metaverse and Reality Labs.
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