Virtual reality, according to Mark Zuckerberg, is the new frontier that will propel Meta’s expansion. However, there hasn’t been much of it so far. The value of the Meta shares has dropped, while revenues and profitability are also declining. On Wednesday, things got worse as Meta, gave investors an update on the three months that ended in September.
In response to investor concerns about the state of his company’s online advertising business, Meta CEO Mark Zuckerberg reaffirmed his commitment to investing billions of dollars in the development of the metaverse.
Meta’s massive declining revenues
In a conference call with analysts as part of Meta’s third-quarter earnings report, Zuckerberg and other Meta executives dealt with a number of inquiries from analysts who appeared to be growing increasingly irate with the company’s rising costs and expenses, which increased 19% year over year to $22.1 billion during the quarter. Shares of Meta fell 19% after the business provided disappointing fourth-quarter outlook that fell short of analysts’ expectations. In the third quarter, the third-party owner of Facebook saw a 4% year-over-year decline in sales to $27.7 billion and a 52% decline in profit to $4.4 billion.
The Reality Labs division of Meta, which is in charge of creating the underlying virtual reality and related augmented reality technology for the yet-to-be-constructed metaverse, has already lost $9.4 billion in 2022. As a result of “reduced Quest 2 sales,” according to Meta’s chief financial officer Dave Wehner, revenue in that business unit decreased by nearly 50% year over year to $285 million.
Concerns of Meta Investors
On the analyst call, Chief Executive Officer and Founder Mark Zuckerberg stressed the significance of keeping in mind the quite vast” scope of the metaverse initiatives. The social component, like the avatars that will give a sense of presence, is also present in addition to the Quest headsets that you can see. Additionally, a work-focused product like the one that was just unveiled at Connect will be available in VR in addition to consumer-focused products that will be widely used. “It’s often going to take a few versions of each product before they become mainstream,” Zuckerberg added.
Investors expressed alarm over the losses, but Zuckerberg remained convinced that his investments in the metaverse and other “experimental bets” would start to pay off. These will ultimately turn out to be really significant investments for the future of the company, according to Zuckerberg. “I think that our work here is going to be of historical importance and create the foundation for an entirely new way that we will interact with each other and blend technology into our lives as well as the foundation for the long term of our business.”
According to a statement from Meta, they do believe that Reality Labs operating losses in 2023 will climb dramatically year over year. Beyond 2023, they anticipate timing Reality Labs investments so that they can eventually reach their long-term objective of increasing overall company operating income. Each advancement is sort of heading in the right way as indicated by Zuckerberg, even though he can’t tell all of us right now how huge they are going to scale.
According to Zuckerberg, Meta is struggling with a number of issues including the weak economy, the continuing impacts of Apple’s 2021 iOS privacy update that made it more difficult for Meta to target adverts to consumers. He predicted that long-term investments in the metaverse will provide bigger returns over time.
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