No one said the shift to web3 would be easy. That’s certainly the sentiment at Meta, which saw drops in sales and profits in their quarterly earnings announcement this week. Reality Labs, the tech-driven division of the company that is focused on VR and AR hardware and software and other metaverse-related verticals, posted a loss of $3.7B on the quarter alone – totaling nearly $10B on the year.
The news certainly comes at an especially inopportune time as the social media firm turned tech company looks to avoid the long-term demise of previous competitors like MySpace.
Meta stock recorded a nearly 6% loss by the closing bell on Wednesday, and posted at nearly 20% losses in after hours. After hours are not always true indicators of stock price and Thursday’s opening bell for the NASDAQ will offer more perspective.
Meanwhile, metaverse-based tokens and other digital assets have seen generally nice bump in recent days. After long criticism of immense volatility, top crypto tokens have performed with more stability in recent weeks and months than the S&P 500 and NASDAQ.
The company also was hit with a roughly $25M fine later on Wednesday for campaign finance disclosure violations. While Meta is clearly still driving high revenues, operating margins have been chopped and show the costs of evolving identity.
Meanwhile, social media platforms are continuing to make a splash as Twitter nears a closing deal for a firery Elon Musk acquisition, Reddit’s latest web3 venture into NFT avatars, and the ever-constant murmurs of new social media platforms like Jack Dorsey’s Bluesky. Social channels have seemingly become topics as hot as the content that’s on them.
And across other metaverse-focused ventures in web3, the often-named Decentraland and The Sandbox have both seen strong token performance over the course of the past week after persisting through tough market conditions this year.
Innovation is often criticized until it’s done right, but there’s certainly no promises in building a sustainable product in web3 simply because Zuckerburg and company did it in web2. In all, Meta is taking a calculated, but arguably necessary, hit in the short-term for sustenance in the long-term; we’ll see if it pays off.
Featured image from Pexels, Charts from TradingView.com
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