The latest earnings report by Meta, Facebook’s parent company, reveals that its metaverse division Facebook Reality Labs (FRL) has lost over $3.6 billion in the third quarter of 2022. The number is significantly higher than last year’s $2.63 billion loss from the same period.
FRL is Meta’s virtual reality arm. It designs hardware and software such as the Oculus virtual reality set and the famous Horizon World metaverse project. It was launched in August 2020.
The newest release is the most recent among a string of difficult earnings reports for the social media giant. It signals that the new products that have been introduced are not quite translating into profits for the company. In the second quarter of 2022, Meta lost $2.8 billion. The year-to-date loss figure amounts to $9.43 billion.
In the recent report announcing this quarter’s results, the company mentioned that it expects its losses to continue to grow significantly in 2023. However, FRL expects to contribute to the overall growth in revenue and operating income in the long run.
At the company’s conference call, Meta CEO Mark Zukerberg acknowledged the challenges in the metaverse segment, but said that he remains optimistic. He argued that the sound fundamentals of the project and Meta’s focus on efficiency will ensure FRL’s growth.
Meta is under pressure to reduce spending in the metaverse division as low user growth and reduced ad spending by users have cut into the profitability of the company. In 2021, Meta accumulated a loss of $10.3 billion in its FRL division on a revenue of $2.3 billion.
The metaverse segment as a whole too has been having a tough time. In the Q3 of 2022, for instance, NFT volume has decreased 66.5% quarter-on-quarter. Meanwhile, active NFT traders decreased 30.4% quarter-on-quarter, according to a Q3 2022 crypto market report from Coinmarketcap. The value of the flagship crypto fund from Andreessen Horowitz, also known as a16z, dropped by 40% as well during this period.
Following the release of the report, the shares of Meta nosedived by 15%. Meta stocks lost more than 60% of value year-to-date.
