Reality Labs, the metaverse-focused division within Meta, formerly known as Facebook, posted a net loss of nearly $4 billion in the first quarter of 2023. However, Meta CEO Mark Zuckerberg remains confident about the metaverse as the company plans to invest more in the space.
Things are not going as planned for Reality Labs, since its whole side pivot to the metaverse. Last year, Meta reported that its Meta Reality Labs division suffered close to a staggering $13 billion in losses. After losing billions of dollars and being forced to shed a huge chunk of its workforce, the social media behemoth is trying to cope with the global financial dynamics and the addition of blockchain technology and its influences on the tech industry economy.
Despite the severe losses, Zuckerberg continues to remain confident specifying the company has no plans to shift its focus from the metaverse. During Meta’s earnings call on Wednesday, Zuckerberg noted,
“Building the metaverse is a long-term project, but the rationale for it remains the same and we remain committed to it.”
Challenging Times For Meta
According to the first quarter earnings report, Reality Labs recorded a $3.99 billion operating loss as Meta workers brace for another round of layoffs as the embattled social media firm continues to cut costs. Meanwhile, the revenue from Reality Labs was close to $339 million. On the brighter side, the company lost relatively less amount of money compared to the corresponding quarter last year.
In Q1 2022, the platform recorded a loss of $4.28 billion. Since 2019, Meta has pumped tens of billions of dollars into its metaverse and virtual-reality businesses, leading to massive losses that are crushing the company’s profits.
As per reports, Meta has plowed nearly $36 billion into Reality Labs. However, it made a massive $30.7 billion operating loss over the same period. Meta has also been under pressure from Wall Street to cut spending on its Metaverse projects.
Zuckerberg Remains Confident
Last year, Brad Gerstner, CEO of Altimeter Capital, a tech-focused hedge fund with a 0.1% stake in Meta, urged the company to slash headcount by at least 20% and limit Reality Labs investments to no more than $5 billion a year. In an open letter to Zuckerberg, Gerstner explained, “that the company’s focus on the metaverse had distracted it from focusing on its core business“.
Even in the face of such adversity, Zuckerberg continues to remain confident in grand plans of building virtual reality (VR) and augmented reality (AR) technologies for the futuristic metaverse. He also confirmed that Meta will launch a new consumer-oriented virtual and mixed-reality device later this year. Furthermore, the company said, it continues to expect the operating losses of Reality Labs to increase year-over-year in 2023. Meta wrote,
“We expect second quarter 2023 total revenue to be in the range of $29.5-32 billion. Our guidance assumes foreign currency headwinds will be less than 1% to year-over-year total revenue growth in the second quarter, based on current exchange rates.”