The dream of Mark Zuckerberg to create the internet of the future is costing Meta billions of dollars every three months. The part of Meta responsible for creating the metaverse, Reality Labs, revealed a loss of $3.67 billion in the three months ending from july to September, up from $2.8 billion the previous quarter, according to Engadget.
One year has passed since Facebook’s well-known rebranding as Meta. Apart than the Quest Pro VR headset, the company’s accomplishments aren’t particularly noteworthy. The promised virtual world appears to be at best average, according to the metaverse’s sneak peeks.
The fact that Meta is spending enormous sums of money each quarter while suffering losses of close to $20 billion since the rebranding is what is making it the talk of the town. Investors in the company, who anticipate a quick decline in the economy and are wondering when the crazy at Meta will end, are particularly concerned about this.
Meta’s losses on metaverse to pile up
If Meta’s rising losses in the segment had many investors concerned about Zuckerberg’s line of thought, his statements during the results call will undoubtedly create pain, as the CEO expected losses to rise much higher next year.
Reality Labs, according to Zuckerberg, would spend more money in 2023 with little financial return. The CEO, on the other hand, sees his metaverse wager as a long game that could end up paying everyone who is patient.
When Zuckerberg paid billion to purchase Instagram, many questioned his plan of action. However, the service has significantly increased Meta’s revenue and has increased in value by a factor of 100 to date.
Markets Insider quoted Zuckerberg as adding on the earnings call that he hopes to repeat history with his metaverse, which he believes is fundamentally “important to the future” and “would be a mistake not to focus on.”
Additionally, Zuckerberg acknowledged that the existing state of the metaverse was very different from the ideal outcome that his firm strives to achieve.
Advertising braces for tough times
Investors were not greatly comforted by Zuckerberg’s remarks, and Meta’s stock price dropped by about 20% after the earnings call. The stock price has dropped by over 70% this year, to $104.30. In addition to Zuckerberg’s metaverse intentions, the decline in stock price was caused by a nearly 4% decline in revenue this quarter.
This quarter, Meta’s revenues totaled $27.7 billion, down from $29 billion during the same period previous year. However, Meta is not the only business to experience a decline. According to the NPR study, this quarter’s advertising sales for Google and YouTube both decreased compared to the same period last year.
This might also be a result of Apple’s new privacy guidelines, which limit the ability of advertising businesses to deliver more individualised advertising by requiring applications to request users’ consent before tracking their data.
Microsoft witnessed an increase in its year-over-year revenues for this quarter, reporting $50.1 billion in revenue compared to $45 billion last year. Microsoft’s revenues are not only driven by advertisements.