Mark Zuckerberg’s metaverse dream just suffered another major blow as Meta’s Reality Labs, the division responsible for building the metaverse, posted a staggering $13.7 billion loss for the year. The loss was revealed in the company’s latest earnings report and marks a significant setback for Zuckerberg’s grand vision of a virtual world where people can interact, play, and work.
Meta’s Reality Labs was founded in 2013 to create a new type of computing platform that would allow users to experience the physical and virtual worlds seamlessly. The division has been working to develop cutting-edge virtual and augmented reality technology and has attracted a lot of attention and investment in recent years.
However, despite the hype and excitement around the metaverse, the division has struggled to turn its vision into a profitable business. In addition to the $13.7 billion loss, Meta’s Reality Labs has also posted several consecutive quarterly losses, which has caused some investors to question the viability of the company’s business model.
The company posted its fourth-quarter earnings report on Wednesday, with Reality Labs showing an operating loss of $4.28 billion for the fourth quarter, wider than the $3.3 billion in the previous quarter. Nonetheless, the figure is marginally below analysts’ forecasts of a loss of roughly $4.36 billion for the quarter, according to CNBC’s StreetAccount reference. This figure, combined with Meta’s user base strength and anticipated cost-cutting, boosted the stock by about 19% in after-hours trading. According to CNBC’s StreetAccount reference, Reality Labs made $727 million in revenue for the fourth quarter, which was slightly above analyst projections of $715.1 million.
The losses have also cast doubt on Zuckerberg’s ability to turn his metaverse vision into reality. The Facebook CEO has been a vocal advocate for the metaverse and has invested heavily in technology, but so far, the division has failed to produce significant revenue.
Many experts attribute the division’s losses to a lack of consumer adoption of virtual and augmented reality technology. While the technology has been praised for its potential, many consumers are still hesitant to embrace it, which has made it difficult for Meta’s Reality Labs to generate revenue.
However, simultaneously, Meta’s stock has risen 19% in the hours since the data were released, indicating that many investors are ignoring losses in a division that accounts for just over 2% of the company’s revenue.
Despite the challenges, Zuckerberg remains optimistic about the future of the metaverse. In a recent interview, he stated that the division is still in its early stages and that it will take time to build the technology and gain consumer adoption. He also emphasized that the division is still making important strides in developing the metaverse and that he believes it will eventually become a thriving business.