Mark Zuckerberg's metaverse dream is costing billions — and Meta plans to spend more next year

It's going to get even worse, says the CEO in the earnings call.
Ameya Paleja
Mark Zuckerberg sitting in a suit
Mark Zuckerberg

iStock/COM & O 

Mark Zuckerberg's dream of building the future of the internet is costing Meta billions of dollars every quarter. In the quarterly earnings call on Wednesday, Reality Labs, Meta's division tasked with building the metaverse, reported a loss of $3.67 billion in the period between July through September, up from $2.8 billion in the previous quarter, Engadget reported.

Facebook's famous rebrand to Meta has now seen a year. However, apart from the Quest Pro Virtual Reality (VR) headset, the company has little to brag about its achievements. The glimpses from the metaverse show that the promised virtual world appears mediocre at best.

What is making it the talk of the town is the fact that Meta is spending billions every quarter and has raked up losses close to $20 billion since the rebrand. This is especially worrying for the company's investors, who expect the economy to take a downturn soon and are wondering when the madness at Meta will stop.

Meta's losses on metaverse to pile up

If Meta's climbing losses in the segment had many investors worried about Zuckerberg's line of thought, then his comments in the earnings call will surely cause pain as the CEO expects the losses to pile up even further next year.

Zuckerberg sees Reality Labs spending more money in 2023 without much of a financial return. However, the CEO looks at his metaverse bet as the long game that could end up rewarding everybody who is patient.

As Interesting Engineering has previously reported, many doubted Zuckerberg's strategy when he bought Instagram for a billion dollars. However, the service has become one of the biggest sources of revenue for Meta and has grown 100-fold in valuation so far.

Zuckerberg is hopeful that he can repeat history once again with his metaverse, which according to him, is fundamentally "important to the future" and "would be a mistake not to focus on," Markets Insider reported him saying during the earnings call.

Most Popular

Zuckerberg also admitted that the current version of the metaverse was far away from the final product that his company aspires for.

Mark Zuckerberg's metaverse dream is costing billions — and Meta plans to spend more next year
Social media cubes

Advertising braces for tough times

Zuckerberg's comments did little to assuage investors, and Meta's stock price slid by nearly 20 percent following the earnings call. At $104.30, the stock price has dwindled nearly 70 percent this year. Apart from Zuckerberg's metaverse plans, a nearly four percent drop in revenues this quarter also contributed to the drop in stock price.

Meta's revenues this quarter stood at $27.7 billion, as compared to $29 billion in the same period last year. However, Meta isn't the only company to see a drop. According to NPR's report, advertising revenues for Google, as well as YouTube, have also witnessed drops this quarter when compared to last year.

This could also be a result of Apple's new privacy rules that require apps to get user permission before tracking their data and has impacted advertising companies' abilities to deliver more personalized advertising.

Microsoft, whose revenues are not driven by advertisements alone, saw a rise in its year-on-year revenues for this quarter as it reported $50.1 billion revenue as against $45 billion last year.

message circleSHOW COMMENT (1)chevron