During a conference call, Mark Zuckerberg explains that his metaverse strategy is beyond the company’s current effort to develop its virtual reality business.
Meta Platforms Inc (NASDAQ: META) has announced its second straight revenue decline in Q3 2022. The company noted that it saw $27.71 billion in revenue during the quarter, of which its Facebook Reality Labs (FRL) generated only $285 million. Per Meta, the revenue would have been $1.79 billion higher if the foreign rates were stable. Facebook Reality Labs division includes Meta’s virtuality and augmented reality. Before now, analyst projections were that revenue from Reality Labs would plummet from its Q2 figures of $452 million. Expectations were for the third quarter’s income to be $408 million. Unfortunately for the Lab, the revenue fell short of the forecast. In Q3 2022, FRL recorded a loss of $3.7 billion compared to a loss of $2.8 billion in Q2 2022.
After the news, the stock of the company is down. At the moment of writing, Meta stock is more than 20% down in the pre-market, trading at around $103.
According to a press release by Meta, the company states that the operating loss of Facebook Reality Labs (FRL) will continue to increase significantly in 2023. Mark Zuckerberg, the CEO of Meta, states:
“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”.
Would Meta See More Losses Beyond Q3 2022?
Many investors have beckoned on the Meta to cut its cost of production in the metaverse. In 2021, Facebook Reality Labs (FRL) reportedly generated an income of $2.3 billion and a loss of $10.2 billion. FRL has already lost $9.4 billion in 2022, yet Meta will spend more in future years. The CEO of Altimeter Capital Management, Brad Gerstner, has proposed a 3-step plan to double the free cash flow (FCF). In his Medium post, he tells Meta to reduce the headcount by at least 20%, reduce annual CAPEX by $5B and limit the investment in metaverse to $5B per annum.
During a conference call, Mark Zuckerberg explains that his metaverse strategy is beyond the company’s current effort to develop its virtual reality business. He buttressed that his plight in the metaverse includes R&D development initiatives geared towards developing AR and neural interface technologies.
Mark, during his meeting with a team of analysts, stated:
“Look, I get that a lot of people might disagree with this investment [in the metaverse], but from what I can tell, I think this is going to be a very important thing. I think it would be a mistake for us to not focus on any of these areas which I think are going to be fundamentally important to the future.”
Further reports show that the revenue Meta accounted for in Q3 2022 was higher than the forecast value of $27.4 billion. However, the company might wallow in a deficit in Q4 of 2022. Meta estimates to generate approximately $32.5 million in Q4 of 2022.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
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