It’s remarkable how much can change in just one year. Nowadays, AI is dominating the conversation, but it’s worth recalling that not long ago, the metaverse was stealing the spotlight when Facebook rebranded itself as Meta to focus on the metaverse.
Unfortunately, the gamble didn’t pay off for Meta. By November 2022, Meta had suffered a staggering loss of $700 billion in market capitalization. Fast forward more than a year later, Meta continues to bleed billions in cash on its failed metaverse ambition.
In today’s second-quarter earnings report, Meta shared some troubling numbers for its Reality Labs unit, indicating significant financial struggles. According to the report, Reality Labs, responsible for developing virtual reality and augmented reality technologies for the metaverse, reported a staggering loss of over $21 billion since the beginning of last year.
During the second quarter of this year, Reality Labs recorded $276 million in sales. However, it also reported a concerning $3.7 billion operating loss during the same period. This marked a decline in sales compared to the previous quarter when the unit brought in $339 million in revenue.
Analysts had projected a more optimistic outlook, anticipating $421 million in sales with $3.5 billion in operating losses for Reality Labs. Unfortunately, the actual results fell short of these expectations.
In the previous year, Reality Labs faced even bigger challenges as it lost a total of $13.7 billion while generating $2.16 billion in revenue. Part of its revenue came from sales of Quest-branded VR headsets. The first quarter of this year alone accounted for a loss of $3.99 billion for the unit, contributing to its substantial total losses of about $21.3 billion since the start of last year. These numbers highlight the unit’s struggles and underscore the difficulties Meta is facing in making the Metaverse vision financially viable.
Meta’s woes started back in October 2021 after the company rebranded from Facebook to Meta to focus on the metaverse. Meta has lost over $700 billion of its value since its peak last year as all its business units continue to get pummeled on multiple fronts. The social giant has lost 70% of its value YTD as its stock falls from $300 to just $100.
That’s not all. As of November 2o22, Zuckerberg had also lost over $100 billion in personal net worth. But the company has since recovered from its 2020 lows.
Meta said it plans to invest $10 billion in the metaverse to reflect the company’s new vision. At the time, Meta said it plans to hire 10,000 people in the European Union to build a “metaverse.” Zuckerberg added that the metaverse is a major investment for the company and plays a vital role in the company going forward.