Facebook parent company Meta Platforms has released third-quarter reports which show a loss from its Meta’s metaverse Reality Labs. The report revealed a total loss of $3.7 billion recorded in Q3, up from $2.8 billion in Q2. Citing losses, the company said it expected Facebook Reality Labs’ operating losses in 2023 to grow “significantly” year over year.
“Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run,” the press release mentioned.
Mark Zuckerberg, Meta founder, and CEO also stated “Our community continues to grow and I’m pleased with the strong engagement we’re seeing driven by progress on our discovery engine and products like Reels.
While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”
Investors Express Concerns About Meta’s Metaverse
Likewise, he declared his optimism about the Metaverse, saying it would be a mistake not to focus on the Metaverse. This belief in the metaverse contributed to Meta’s move to join the Crypto Open Patent Alliance’s (COPA’s) Board in February. Although many investors do not share Zuckerberg’s optimism, they have called on Meta to reduce the spending on the metaverse.
These investors cited lower user growth numbers and reduced ad spending as contributors to its results. Due to these concerns, the Bank of America (BofA) downgraded Meta’s shares on the stock market from buy to neutral. BofA fears that analysts are unlikely to back out metaverse spend from earnings per share (EPS) for valuation purposes.
Additionally, Facebook Reality Labs reported only $285 million in revenue during Q3 which was from both augmented and virtual reality operations. By all means, this falls short of the $406 million estimated by analysts for the third quarter. It is also a long dip of almost 40% from the $452 million recorded in Q2.
So far, FRL has recorded more than $9.43 billion year-to-date. Noteworthy, Meta’s overall Q3 revenue is $27.7 billion slightly overstepping the $27.4 billion predicted by analysts.
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