In its recent earnings report, Meta announced that its Reality Labs business focused on the Metaverse project in the last quarter of last year. $4.28 billion operating loss which brings the total operating loss of last year to 13.72 billion dollars.
As you know, Meta used to operate under the name of Facebook. Last year was a difficult period as the first working year of this company called Meta. In late 2021, Zuckerberg changed the company’s name and announced that the company’s future would change with Metaverse. Metaverse is a virtual world that has been in the center of attention for the past year and according to analysts, it will shape the future of the Internet.
The operational loss of the Metaverse Meta project
But for now, the Metaverse project is just an additional expense for the company, and Meta is still an online advertising company.
Reality Labs’ business generated $727 million in the fourth quarter and $2.16 billion in revenue for the full year 2022. This figure represents a decrease of 2.27 billion dollars compared to 2021. Sales of Quest series virtual reality headsets are also calculated in the form of Reality Labs unit revenue.
In other words, Meta Reality Labs lost more than six times the revenue it generated last year. This is while Reality Labs accounted for less than 2% of the total sales of Meta. According to StreetAccount, analysts had expected Reality Labs to report revenue of $715.1 million for the business unit with a quarterly operating loss of $4.36 billion.
According to data shared with CNBC by research firm NPD Group, sales of VR headsets in the U.S. in 2022 are down 2 percent year-over-year as of early December.
In July, Meta announced that it was raising the price of its Quest 2 VR headset by $100. The company said at the time that the price increase was necessary to account for inflationary pressures. Meta then introduced its more expensive Quest Pro VR headset in October. and made it available to companies as an enterprise workplace device at a price of $1,500. This week, Meta is having a sale on its high-end VR headset, slashing the price by $400 for a limited time.
Zuckerberg told CNBC’s Jim Cramer last summer that he hopes about a billion people will start using Metaverse by the second half of the decade. But before the Facebook founder’s dreams become a reality, Meta will have to spend billions of dollars developing the virtual reality and augmented reality technology that underpins the Metaverse concept.
Meta expects Reality Labs’ operating losses to grow significantly in 2023 compared to last year. Meta announced that it plans to accelerate its investment in augmented reality labs to achieve its goal of growing the company’s overall operating income in the long term.
Meta has lost nearly two-thirds of its value in the past year. Because Metaverse costs increased and the company’s main online advertising business faced economic problems.
The company reported fourth-quarter results on Wednesday that beat analysts’ revenue estimates and signaled it would buy back $40 billion in shares. As a result of the publication of the financial report, Meta’s share value grew by about 20%.
- Meta acquires Luxexcel; Invest more in Metaverse
- Chatbot Meta accused ChatGPT of providing false information
