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Meta Sticks To Metaverse Plans As Already-Meager Sales Evaporate

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Meta platform metaverse loss will get worse before it gets better. The company’s third-quarter results showed the Reality Labs division’s biggest profit shortfall and lowest earnings since the final quarter of 2020, the first period in which Facebook’s parent company announced separate results for its metaverse unit. .

Not only is Meta struggling to attract users to its project, but shareholders also absolutely hate it. But the company holds firm to its vision.

“We expect Reality Labs operating losses to increase significantly in 2023 year-over-year,” Meta Chief Financial Officer David Wehner said in a statement accompanying the results. He offered only lukewarm comfort for the future.

Revenue from the Metaverse branch was $285 million, slightly more than half of the previous year’s revenue, mainly due to lower sales of the Quest 2 headset. Operating expenses in the most recent quarter he increased to $3.6 billion, and an operating loss of $12.7 billion since the third quarter of last year.

Meta believes it’s largely underfunded to manufacture the new Meta Quest Pro virtual reality headsets that were manufactured this quarter and sold as of yesterday.but at retail price triple The predecessor Meta Quest 2’s $1,500 headset now costs everything against unproven earnings.

Wall Street wasn’t happy with the growing interest in the company’s Metaverse, and Meta’s stock price fell about 20% after hours.

the analyst is warned The high cost of Metabar’s infrastructure means it will not deliver satisfactory returns to shareholders. “A lot of investors feel like they’ve taken their eyes off the ball,” says Brent He Till, managing his director at Jefferies.

Mark Shmulik, Managing Director and Senior Analyst, U.S. Internet, at AllianceBernstein, an asset manager and research firm.

The company made a series of announcements, workplace partnerships with Microsoft
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With Zoom bringing office functionality to the metaverse, the initiative doesn’t seem to promise short-term profits.

If investors haven’t yet liked the level of investment in the Reality Labs division, Zuckerberg’s take on the metaverse on the company’s earnings call was anything but encouraging.

“This is some of the most historic work we’ve done,” he said, referring to Reality Labs’ work on the Horizon World metaverse social platform, virtual and augmented reality applications, and what’s behind them. categorized into four sectors of infrastructure in

“Investors feel there are too many experimental bets,” Thill added on the conference call.

Reality Labs’ predicament includes: decrease in revenue Sales from company properties such as Facebook, Instagram and WhatsApp fell 4% from Q3 2021 to $27.4 billion. Earnings per share were just $1.64, but consensus expected him to be $1.90.

The focus is on the Metaverse as ad revenue is squeezed by macroeconomic issues and the battle for younger audiences between Meta’s Instagram and ByteDance’s TikTok.

“Perhaps there is a view that the more we invest in the metaverse, the more we realize that the decline of our core business is more imminent than we thought,” says Shmulik.

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