The tech giant stated its spending will only increase, athough it is only around $500 million away from surpassing its more than $10 billion losses.
With a $3.67 billion deficit reported for the third quarter of 2022, Big Five technology giant Meta is still losing money through Reality Labs, its metaverse research and development arm, and predicts that losses will worsen next year.
According to Reality Labs’ third-quarter 2022 earnings report, which was released on October 26, the company suffered its largest quarterly losses ever since reporting began in the fourth quarter of 2020.
The third-quarter revenue of $285 million was also the lowest ever for the company during that period. With its third consecutive quarterly loss for Reality Labs, totaling $9.44 billion so far in 2022, Meta is on track to surpass its metaverse play’s losses from 2021, which came in at just under $10 billion.
According to Meta’s chief financial officer Dave Whener, the losses year over year are expected to grow:
“We do anticipate that Reality Labs operating losses in 2023 will 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.”
On Meta’s earnings call, CEO Mark Zuckerberg continued to be unfazed by the company’s big investment in what he called the “next computing platform.” He said it was the firm’s top priority and told investors that building a metaverse and its related hardware is “a massive undertaking.”
“It’s often going to take a few versions of each product before they become mainstream,” he added. “I think that our work here is going to be of historical importance and create the foundation for an entirely new way that we will interact with each other and blend technology into our lives as well as the foundation for the long term of our business.”
Overall, the company’s quarterly revenue of $27.71 billion slightly beat Wall Street analysts’ estimates, while its profits per share of $1.64 fell short of their projection of $1.88. According to Yahoo Finance, the price of Meta’s stock has down over 19.5% in after-hours trading as of this writing, with the value of the company’s shares down over 61.5% since the year’s beginning.
Some investors are urging Meta to scale back its investment due to the company’s large wager on its virtual world. Brad Gerstner, the founder of the technology investment firm Altimeter Capital and a shareholder in Meta, wrote an open letter to Zuckerberg and the board of directors.
Gerstner claimed that the company’s “investment in an unknown future is super-sized and terrifying” and that it might take ten years before its metaverse begins to turn a profit. He suggested that the company concentrate on an artificial intelligence offering because it has the potential to improve the company’s performance.
Some people are pessimistic about Zuckerber’s plans for the metaverse’s future. In April, meta-whistleblower Frances Haugen claimed that if the firm doesn’t commit to openness, its virtual world will replicate “all the harms of Facebook.”
