Wall Street is losing patience over meta boss Mark Zuckerberg’s heavy and experimental bet on his Metaverse project, which helped raise the company’s total cost by a fifth in the third quarter.
Investors rushed to dump Meta Platforms Inc. stock after hours, pushing it down 20% and wiping $67 billion off its market value after the company posted its fourth straight decline in quarterly profit.
The Facebook-parent said its overall spending could rise up to 16% next year and anticipates that operating losses at Reality Labs — the entity responsible for bringing the Metaverse to life — will “grow significantly” next year.
A Meta shareholder recently expressed concern, calling the company’s investment “super-sized and terrifying.” Analysts on Wednesday called them “confounding and confusing” and Meta’s inability to cut costs “extremely troubling.”
On a post-earnings conference call, Jefferies analyst Brent Thiel asked executives: “I think in a nutshell, how investors are feeling right now is that there’s a lot of experimental bets versus proven bets on the original.. . I think everyone would love to hear why you think it pays off.”
Reality Labs’ loss increased to $3.67 billion in the July-September quarter from $2.63 billion a year ago. Revenue nearly halved.
“It would be a mistake for us not to focus on any of these areas that will be fundamentally important to our future,” Zuckerberg said on the call.
“I know sometimes when we ship a product… people say: ‘Hey, you’re spending all this money, and you made this thing,’ and I think really about it. I don’t have the right way to think.”
“…we are working on pioneering what will become … eventually mature products on different locks at different times in the next five to 10 years.”
He talked about the company’s various endeavors, including a recently unveiled virtual and mixed reality headset called the Quest Pro that costs $1,500 and a social metaverse platform where people can express themselves through avatars. can express.
He said Meta is investing in two other areas: augmented reality and neural interfaces.
big gamble
“The metaverse … seems like a big gamble given the economic crisis,” said Paolo Pescatore, an analyst at PP Foresight, adding that the journey ahead was going to be “long and painful”.
“People aren’t getting out of their seats to buy a VR headset or watch 360-degree video… the new device still feels like an expensive toy,” he said.
At a time when other tech companies like Microsoft and Google-parent Alphabet are cutting jobs or slowing hiring, Meta’s headcount jumped 32% in the third quarter from the end of the second quarter.
In an open letter to Zuckerberg on Monday, Meta shareholder Altimeter Capital Management called for Meta to streamline by cutting jobs and capital spending.
The fund suggested that the meta-cap annual investment in the metaverse be $5 billion instead of the current $10 billion.
This story has been published without modification in text from a wire agency feed.
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