CEO Mark Zuckerberg remains hopeful about the company’s metaverse prospects despite sinking $3.7 billion in operating losses in the second quarter of this year.
Meta’s Metaverse Investment Takes a TollThe tech giant posted its latest earnings report, which revealed that it had faced significant losses in the second quarter of 2023, with metaverse-related expenses amounting to a staggering $3.74 billion.
As part of its ongoing investment in the virtual reality (VR) business, Meta has already spent a total of $7.7 billion in 2023. Despite the substantial losses in its metaverse ventures, Meta managed to report an 11% increase in revenue for Q2 2023 compared to the same period last year, reaching a total revenue of $31.9 billion. This revenue growth, however, was overshadowed by the concerning performance of its metaverse-focused Reality Labs.
Reality Labs Revenue Hits a LowThe revenue from Reality Labs, which is responsible for Meta's metaverse initiatives, plummeted by nearly 40% compared to Q2 2022, hitting its lowest point in two years with just $276 million in revenue. Meta's financial chief, Susan Li, attributed this sharp decline to reduced sales of its VR headset, Quest 2. Additionally, the department's expenses rose by 23% to $4.0 billion, primarily due to increased staffing costs.
Meta anticipates further challenges for Reality Labs, with projected operating losses expected to persist throughout 2023. The losses were attributed to the ongoing development of VR-related products and continued investments in the metaverse.
Following the earnings announcement, Meta's stock price experienced a significant surge, rising over 7% in after-hours trading, reaching around $320, as reported by Google Finance data. Despite this recent increase, $META shares remain below their all-time high of over $378, set in September 2021. Nevertheless, the stock has gained nearly 140% year-to-date.
Threads Platform Faces ChallengesZuckerberg acknowledged that while the platform had seen unexpected daily engagement, the company's primary focus was on user retention, followed by growth and eventual monetization. This statement came on the same day as a report from Similarweb, claiming that Threads had experienced a 60% decline in users since its launch. Threads initially reached 49 million daily active users on its Android app on July 7, but the numbers fell drastically to 12.6 million by July 23.
However, the CEO has remained hopeful about the platform’s performance, claiming that the company strategy was “fully committed to the metaverse vision.”
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