Ein applaudierender Mark Zuckerberg. Jeff Bottari/Zuffa LLC
Meta has lost more than $40 billion on Metaverse projects to date and expects to lose even more.
Mark Zuckerberg feels that “the world is going in this direction.”
Suddenly, Wall Street is becoming a little more forgiving — here’s why.
This is a machine translation of an article by our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
Wall Street begins to come to terms with the vast amounts of money Mark Zuckerberg pours into the metaverse. Second-quarter results show that collective losses at Reality Labs, Meta’s Metaverse unit, have now exceeded $40 billion, with more financial losses on the horizon.
Still, investors sent Meta’s stock up 7 percent on Wednesday after hearing Zuckerberg explain why he continues to invest so much money in what is still a largely untested area.
“This is a very long-term bet,” Zuckerberg said on a conference call with analysts, “I can’t guarantee you that I’m right on this bet. But I believe that this is the direction in which the world is going.”
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Zuckerberg detailed the various consumer technology trends he’s observed that lead him to believe that a more immersive version of the internet will become the norm in the years to come.
“There are a billion or two billion people who wear glasses today. I think in the future they’re all going to have smart glasses, and all the time we’re spending on TVs and computers is going to become more and more immersive and look more like VR in the future,” Zuckerberg said. “What we’re seeing are richer opportunities for getting people to communicate, even through the mobile apps that we have, from text to photos to video, just this ongoing trend towards more immersion. All these trends lead me to believe that this is the way to go. I think we’ll be glad we did that.”
This time around, analysts have been pestering Zuckerberg far less about spending on the metaverse than they have in previous quarters. The difference: Last year, Meta reported slower or negative revenue growth. Now the focus of the conference call was on Meta’s AI projects and the surprising growth and success of Threads.
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Wall Street’s acceptance of Metaverse spending is likely related to the fact that Meta’s overall financial results have improved. Sales increased in the second quarter and are expected to continue to increase in the next quarter. Meta has made extensive layoffs and cut spending in other ways.
That means Zuckerberg is closer to his promise last year to increase revenue and profits from Facebook, Instagram, and WhatsApp enough to cover the Metaverse’s running costs. In the second quarter, earnings from this family of apps increased by $2 billion, while losses from Reality Labs were $3.7 billion. So a little more than half is done.
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