Meta warns that Reality Labs will continue in losses and that they could exceed $10 billion.
Meta announced in its latest quarterly report that its Reality Labs metaverse had losses of $4.28 billion in the last quarter of 2022 and that the division warns its losses could exceed $10 billion in the coming years.
Meta’s metaverse unit, Reality Labs, lost $13.7 billion in 2022, proving that Mark Zuckerberg’s metaverse bet becomes more expensive. In the last quarter of the year, Reality Labs had revenues of $727 million, and $2.160 million in 2022, while in 2021 it generated $2.270 million.
Zuckerberg Reacts
Mark Zuckerberg noted the following in his quarterly report:
“Our community continues to grow and I am pleased with the strong engagement in our apps. Facebook just reached the 2 billion daily active milestones. The progress we’re making on our AI discovery engine and Reels are major drivers for this. Beyond this, our management theme for 2023 is the Year of Efficiency and we are focused on becoming a stronger and leaner organization.”
Reality Labs lost more than six times the amount of capital it generated in revenue and accounted for less than 2% of Meta’s sales. According to CNBC, Reality labs’ fourth-quarter Q4 losses were expected to be $4.36 billion.
In November last year, Zuckerberg, in a message to Meta employees, stated the following:
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.”
Meta Admits It Will “Keep Losing” In Its Bet On the Metaverse
In 2022, Meta’s shares fell a total of 60%, while Zuckerberg insists that the metaverse will be the “main interaction” of people in the future.
On the other hand, Zuckerberg revealed weeks ago that his investment in the metaverse will increase, in the following terms:
“Beyond 2023, we hope to accelerate Reality Labs’ investments in such a way that we can achieve our goal of increasing the company’s overall operating income over the long term.”
On the other hand, Meta reported a $40 billion increase in its share repurchase authorization, which exceeded its expectations, while cash and marketable securities amounted to $40.740 million at the end of 2022. Meanwhile, the company’s debt amounted to $9.92 billion.
In addition, Meta pointed out that despite the layoffs, its number of employees is larger than in 2021:
“Headcount was 86,482 as of December 31, 2022, an increase of 20% year-over-year. Our reported headcount includes a substantial majority of the approximately 11,000 employees impacted by the layoff we announced in November 2022, who will no longer be reflected in our headcount by the end of the first quarter of 2023.”
By Audy Castaneda
