Mark Zuckerberg, chief executive officer of Meta Platforms Inc., demonstrates Meta Quest Pro during the Meta Connect virtual event in New York, U.S., Tuesday, Oct. 11, 2022.

Michael Nagle | Bloomberg | Getty Images

Mark Zuckerberg’s dream of a future in the metaverse is worth a lot of money to investors.

In an earnings report after the call on Wednesday, Meta said its Reality Labs division, which houses the company’s virtual reality technologies and projects, posted an operating loss of $4.28 billion in the fourth quarter, bringing its total for 2022 to $13.72 billion.

It’s been a rough first full year for the new company Meta, formerly known as Facebook. In late 2021, Zuckerberg changed the company’s name and said its future would be in the metaverse, a digital universe where people work, shop, play and learn.

But for now, it’s just a cost center, and Meta is still an online advertising company.

Reality Labs Earns $727M in Q4 and $2.16B in Full-Year 2022 Revenue — down from $2.27 billion in 2021 — including Quest headset sales. In other words, the division lost more than six times the amount of money it made in revenue last year, while accounting for less than 2% of Meta’s total sales.

Analysts had expected Reality Labs to post a quarterly operating loss of $4.36 billion on revenue of $715.1 million, according to StreetAccount.

Sales of virtual reality headsets in the U.S. are down 2% in 2022 from a year earlier as of early December, according to data provided to CNBC by research firm NPD Group.

In July, Meta announced that it was raising the price of its Quest 2 VR headset by $100. At the time, the company said the price increase was necessary to account for inflationary pressures. In October, Meta debuted its more expensive Quest Pro VR headset, offering it to companies as an enterprise device for $1,500. Meta is having a sale on its high-end VR headset this week, dropping $400 for a limited time.

Last summer, Zuckerberg told CNBC’s Jim Cramer that he hoped to “get to about a billion people in the meta-universe doing hundreds of dollars worth of commerce” by the second half of the decade.

But before the Facebook founder’s dreams become a reality, Meta must spend many billions of dollars developing the VR and augmented reality technologies that underlie the concept of the meta universe.

Last year, the company said it expected Reality Labs’ “operating losses to increase significantly in 2023 compared to last year.”

“After 2023, we expect to grow Reality Labs’ investment in a manner that will achieve our goal of increasing the company’s total operating income over the long term,” Meta said at the time.

Shareholders have been less than thrilled with the results so far. Meta has lost nearly two-thirds of its value in the past year as spending on the meta universe has skyrocketed and the company’s core online advertising business has been hit by a tough economy, increased competition from TikTok and Apple privacy update, limit ad targeting.

On Wednesday, the company reported fourth-quarter results that beat analysts’ revenue estimates and announced a $40 billion buyback, sending shares up more than 17% in extended trading.

LOOK: Tie a lower benchmark that symbolizes general economic caution and headwinds

Snap's weak guidance is emblematic of general economic caution and headwinds, says Margins' Ranjan Roy

Source by [author_name]

Previous articleFacebook’s parent company Meta announces a $40 billion stock buyback
Next articleChip stocks rise after AMD earnings and Fed rate hike