Mark Zuckerberg’s dream of a virtual super-universe (metaverse) is costing investors a lot of money.
According to CNBC, in its earnings report on February 1, Meta said that Reality Labs, which focuses on the company’s virtual reality projects and technologies, posted an operating loss of $4.28 billion in the fourth quarter of 2022. , bringing the total loss in this segment last year to $13.72 billion.
At the end of 2021, Meta CEO Mark Zuckerberg changed the company’s name and said the future of the company will be a super universe, where people work, shop, play, and learn in the digital world. But for now, it’s just a “spend hub” and Meta still mostly makes money from online advertising.
Reality Labs generated $727 million in Q4 2022 and $2.16 billion in revenue for the whole of 2022. But that’s still down from $2.27 billion in 2021, including physical sales. Virtual Reality (VR) Quest. In other words, the division lost more than six times what it generated in revenue last year.
Last summer, Zuckerberg told CNBC that he hopes to “get about 1 billion people making transactions in the metaverse” by the second half of the decade. But before the Facebook founder’s dream came true, the company had to spend billions of dollars developing VR and the augmented reality technologies that underpin the metaverse concept.
Meta expects “Reality Labs’ operating loss in 2023 to increase significantly compared to 2022”. “After 2023, we hope to accelerate Reality Labs’ investments so that we can achieve our goal of increasing the company’s overall operating income over the long term.”
So far shareholders have been less than happy with the outcome of the metaverse. Meta has lost almost two-thirds of its value in 2022 as investment costs in the metaverse skyrocket and the company’s core online advertising business struggles, due to global economic challenges, competition increased by TikTok and Apple’s privacy updates and ad targeting restrictions.
However, Meta on Monday reported fourth-quarter results that beat analysts’ revenue estimates and announced $40 billion worth of buybacks, sending the stock up more than 17% in trading. extend.