Tuesday, April 16, 2024
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The metaverse that Zuckerberg dreamed of does not start and Meta shares plummet

Although it has been losing for seven consecutive months, its CEO is still confident that it is on the right track.

The concept that moves the wheels of the technology industry is that to make money you have to invest. And that is what Mark Zuckerberg has been doing with the metaverse. However, the construction of his most precious work takes seven consecutive months without earnings and still not convinced anyone.

According to Meta’s quarterly report, shared this Wednesday by the technology company, the losses of the company’s Virtual Reality division -in charge of the mission- reached 2,960 million dollars.

Zuckerberg acknowledged that those losses could continue for several more years until VR apps and its metaverse platform are mature enough to take advantage of the “massive opportunity” valued at “hundreds of billions of dollars.”

The main reason Meta has been going downhill and unchecked began with its reveal to the world of its metaverse concept, some analysts estimate. However, Zuckerberg shows no doubts and is willing to wait as long as it takes.

The concern of its shareholders is that they do not see a clear direction in which this new initiative is pointing, which has been threatening to stand out for more than a decade without having achieved it to date. Nor are users very convinced of the idea.

Sustained losses are also accumulating at Reality Labs, a satellite firm that creates VR and AR apps to help Meta users. However, these sharp declines are not unusual and are contemplated for divisions in the research and development phase.

In addition to the declines, Reality Labs’ revenue has been trending down since 2021 and its operating margin has been trending down since 2020. The $11.1 billion revenue and 29% margin posted in the second quarter of 2022 are the lowest in the last seven quarters.

Goal Ups and Downs

Work meetings are held in the Workroom.

While the metaverse is still not picking up, Meta is working to get Horizon Worlds – its platform designed for users to interact – to have a more accessible web version. Something that will probably increase the number of users who use it.

The other two legs of this virtual universe are: Workrooms, for collaborative work, and Venues, dedicated to concerts and performances of all kinds. That have even less global presence.

Earlier this year, the company revealed that Facebook failed to grow users for the first time in its history, which led to a major debacle and a nosedive in the company’s stock.

This has already reduced Zuckerberg’s net worth by some $31 billion. However, the fall also had to do with Instagram’s commitment to Reels, TikTok’s direct competitor.

The profits of Meta, which controls WhatsApp, Facebook and Instagram, were 7.5 billion dollars during the first quarter, 21% less than exactly a year ago.

Total revenue increased 7%, reaching 27.9 billion. The number of users on their social networks is also growing, specifically 6% compared to 2021.

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