Reality Labs’ losses come after the company lost $2.9 billion in the first quarter and $2.8 billion in the second quarter.
During the third quarter, Meta’s Reality Labs business — the segment responsible for generating metaverse-related technology — incurred massive losses of about $3.7 billion.
The family of apps section of the corporation, which comprises Facebook, Instagram, Messenger, and WhatsApp, generated around $9.3 billion in net income during the quarter, a 28% decrease year-over-year.
Overall, Meta’s earnings per share of $1.64 fell short of the consensus estimate of $1.89. Its third-quarter net income of over $5.8 billion is dropped 46% from the third quarter of 2021.
“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” Meta Chief Financial Officer David Wehner said in a statement. “Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”
Meta announced a second-quarter loss of $2.8 billion for its Reality Labs segment in July, on top of a first-quarter loss of $2.9 billion. As of September 30th, the unit posted an annual loss of $10,2 billion, increasing total losses to nearly $20 billion.
In order to capitalize on the predicted metaverse trend, Facebook changed its name to Meta in October of last year, resulting in the continuation of losses in this business division.
The share price of Meta is down almost 62% year to date. As of 4:30 p.m. Eastern time, the price was down approximately 11% in after-hours trading.
In an open letter to Mark Zuckerberg and Meta’s board of directors released on Monday, Brad Gerstner, CEO of Altimeter Capital, stated that Meta has “lost the confidence of investors” and suggested that it narrow its focus. He stated that Altimeter is a long-term investor in Meta.
As part of this proposed refocus, Gerstner urged that Meta limit its spending in the metaverse and Reality Labs to no more than $5 billion per year — less than its anticipated investments of $10 billion to $15 billion per year, which Gerstner claimed may take 10 years to produce results.
“An estimated $100 [billion] investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards,” Gerstner said. “We have little doubt investors and others would happily support scaling up these investments as the [return on investment] becomes more tangible — even if still long-term.”
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