Metaverse devours huge sums of money
Meta share rushes after-hours into the depths
10/26/2022, 11:00 p.m
Mark Zuckerberg firmly believes that the future lies in the metaverse. The Facebook parent Meta therefore invested double-digit billions in the development of virtual realities in the third quarter. Investors don’t like the shrinking focus on profits at all.
Sales weakness at Meta is accelerating. In the third quarter, revenue fell by four percent to $27.71 billion, the Facebook parent announced late in the evening after the US stock market closed. The bottom line is that profits fell by 52 percent to around 4.4 billion dollars. The sales forecast also disappointed investors. The stock fell more than 13 percent in after-hours trading. Previously she was already in the wake of disappointing figures from Microsoft and Google down 5.6 percent. This pushed the stock market value of the group by 40 billion dollars.
Facebook is concerned that advertisers are spending less on online ads in the face of high inflation and economic concerns. In addition, the group, which also owns Instagram and Whatsapp, suffers from Apple’s new data protection rules in addition to fierce competition from the video platform Tiktok. The new operating system for iPhones makes it difficult to personalize ads, making them less effective and bringing in less money. For the current fourth quarter, Mark Zuckerberg’s company has announced revenues of 30 to 32.50 billion dollars, which is in line with expectations.
Metaverse devours huge sums of money
In the previous quarter, Meta had reported the first decline in sales, at that time the minus was one percent. While less money is coming in, costs rose by around a fifth to a good $22 billion in the past quarter. Among other things, the development of virtual worlds, to which Facebook founder Mark Zuckerberg wants to align the group, continues to devour a lot of money.
In the past quarter alone, the Reality Labs division, which is working on the so-called Metaverse, posted an operating loss of almost $3.7 billion. Since the beginning of the year, a deficit of 9.4 billion dollars has accumulated. According to CFO Dave Wehner, there is no relaxation in sight. He announced that Reality Labs’ losses would “grow significantly” in the coming year.