- Meta has warned that its Reality Labs Metaverse business will be even more unprofitable in 2023.
- In 2022, the company is poised to spend more than $10 billion on this effort.
- The company’s stock has fallen to its lowest level since 2016.
Meta doesn’t seem to be going to stop spending billions of dollars building the Metaverse, despite Wall Street’s strong desire to cut costs.
The company, which changed its name from Facebook to Meta last year, announced its third-quarter financial results on October 26, 2022. Reality Labs, the division that handles all aspects of the Metaverse, made $9 billion (about 131.5 billion yen) this year. It revealed that it has posted a loss of more than 4 billion dollars (about 58.5 billion yen) in the third quarter alone. The division will lose $10 billion in 2021, and Meta said the division’s spending will continue to grow.
“Reality Labs’ losses in 2023 are expected to be significantly higher year-over-year,” the company said.
Meta also announced that sometime after 2023, it will “increase the pace of investment in Reality Labs to meet its long-term operating profit growth goals for the company as a whole.”
CEO Mark Zuckerberg said on a conference call with analysts that the launch of new virtual reality (VR) headsets and payouts for engineers and others working on the Metaverse will boost spending on Reality Labs in 2023. said to do.
Shares of Meta fell 18% in after-hours trading, its lowest level since 2016.
The declaration to continue to invest heavily in the Metaverse was prompted by the company’s major shareholder, Altimeter Capital, sending an open letter to the company titled “Time to Get Fit” to cut costs. It was issued a few days after asking for. The letter specifically called for capping spending on the Metaverse to $5 billion annually.
A few days before the Altimeter letter was published, Wall Street analysts were concerned about the seemingly slow development of the Metaverse and its flagship product, Horizon World. Avatars are a major part of the immersive digital world Zuckerberg is trying to build. So far, avatars still seem rudimentary, and the things we showed off at the developer conference the other day have yet to come to fruition.
“Captain Zuckerberg continues to steer the Meta ship into the unknown world of the Metaverse, and is willing to spend billions and tens of billions of dollars reinventing himself,” Mirabeau said. Mirabaud, head of TMT research Neil Campling said.
[Original: Facebook and Mark Zuckerberg just raised a giant middle finger to Wall Street. The company says its metaverse business will lose even more money next year.]
(Translation and editing: Toshihiko Inoue)
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Source: BusinessInsider
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