Meta Platform’s fourth straight quarterly decline and consequent market drop is evidence that investors are losing patience with the company’s efforts in the metaverse.
- While Meta’s overall costs are on the rise, its profit declined for the fourth straight quarter.
- Following the announcement, investors dropped Meta stock—resulting in a 20% decline costing the company $67 billion in its market value.
- The company anticipates a 16% increase in overall expenses next year with the possibility of “significant” operating losses through Reality Labs.
Why it’s news
As Meta loses users and ad revenue, CEO Mark Zuckerberg seems to be placing all of his bets on the metaverse, a move questioned by many.
In the quarter beginning in July, Reality Labs total losses reached $3.67 billion, an increase from $2.63 billion the previous year. Overall revenue was cut almost in half.
Reality Labs is responsible for making technology like the metaverse. In a recent call, Zuckerberg said the company is also working on technology like augmented reality and neural interfaces.
While other companies like Microsoft and Alphabet are putting the breaks on the hiring process, Meta is continuing to hire. Its headcount went up by 32% in the third quarter.
Backing up a bit
This year has turned out to be a challenging one for Facebook. Despite dominating social media for years, it seems the company can’t keep up with the competition. At the end of 2021, Facebook lost daily users for the first time.
In February of this year, the company had its worst trading day ever as its market value was cut more than 26%.
When Facebook was founded, it had little to no competition. Now, the social media market is nearing over-saturation.
In the same way that video streaming pushed out cable and Netflix pushed out Blockbuster, without innovation, Facebook may become a symbol of a bygone era