Coinspeaker
Meta Reports $4.5B Loss on Metaverse Business in Q2 2024
Meta Platforms Inc (NASDAQ: META), one of the largest information technology companies in the United States, continues to face financial challenges with its metaverse business. In the second quarter of 2024, the company, formerly known as Facebook, lost an additional $4.5 billion on its metaverse division Reality Labs.
This brings the total losses from Meta’s metaverse venture to nearly $60 billion since 2019 when the company officially debuted.
Metaverse Challenges Continue
Meta’s metaverse initiative, which aims to create an immersive virtual world where users can interact, work, and play, has proven to be a costly endeavor.
On Wednesday, the company posted its quarterly earnings report for Q2 2024, showing that Reality Labs has been burning through billions of dollars as it invests in cutting-edge technology like virtual reality (VR) and augmented reality (AR).
Despite the $4.5 billion loss, Meta still managed to generate some revenue from its metaverse division. According to the earnings report, Reality Labs recorded $353 million in sales during Q2.
With nearly $60 billion lost since the launch of Reality Labs in 2019, Meta’s Chief Financial Officer Susan Li expects the metaverse unit to experience even larger financial losses in the coming year. She attributed this expected increase in losses to ongoing investments in product development, specifically in the areas of AR and VR. According to Li, Meta is continuing to spend heavily on developing new products and technologies within these fields.
Strong Financial Performance in Other Areas
Despite setbacks in its metaverse business, Meta had a strong quarter overall. The company reported higher-than-expected revenue of $49 billion during the just-concluded quarter, representing a 22% increase from the same period last year.
This made Q2 2024 Meta’s second-largest quarter on record. The company posted a profit of $13.5 billion for the quarter.
Much of this success was attributed to advancements in artificial intelligence (AI) and the growth of its popular social media apps, including Threads and WhatsApp. These areas have become key drivers of the company’s financial performance, helping to offset the losses from the metaverse division.
AI and New Technologies Fuel Growth
Mark Zuckerberg, the founder and CEO of Meta, said in a statement that the company’s AI initiatives are starting to pay off. He noted that Meta’s AI capabilities are enhancing user experiences across its platforms by improving content recommendations, personalizing ads, and developing new features.
The Meta boss also disclosed that the company’s AI chatbot known as Meta AI has become very successful and is on track to be recognised as “the most used AI assistant in the world by the end of 2024”.
Additionally, Zuckerberg said the company has seen “good traction” in the number of sales of the recently launched AI-infused Ray-Ban Meta smart glasses. The product was introduced into the market in September 2023. “We’ve released the first frontier-level open-source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps,” Zuckerberg stated.
Looking ahead, Meta plans to increase its capital expenditures in AI by next year. These funds will help the company focus on research and development in artificial intelligence, which is expected to play a crucial role in its future growth.
