As Meta Platforms faces pressure from competitors in the ad space and criticism in the cryptocurrency sphere, its bet on metaverse technology embodied by Reality Labs took a hit in the second quarter, racking up huge losses.
Despite Reality Labs’ huge losses, investors remain optimistic about the division’s success as it focuses on developing augmented and virtual reality hardware and software to complement its diminishing ad revenue.
Zuckerberg still optimistic
Meta reported second quarter revenue of $ 28.8 billion, down from $ 29.1 billion in the first quarter of 2021, marking the first example of a year-over-year decline. Investors were expecting $ 29 billion in the second quarter.
Reality Labs’ operating losses dropped from $ 2.4 billion in the second quarter of last year to $ 2.8 billion this year. In the first quarter of 2022, the division lost $ 3 billion. Revenue fell from $ 305 million in the second quarter of last year to $ 452 million in the second quarter of 2022, but fell below first-quarter revenue of $ 695 million.
CEO Mark Zuckerberg remains optimistic about the growth opportunities that can be found in the division. He predicts that the revenue streams from the company’s metaverse initiative will accumulate billions, if not trillions of dollars. He added that this is a very expensive deal for Meta.
Of particular interest to the cryptocurrency industry is the development of a cryptocurrency wallet called Meta Pay, which experts say should protect consumer assets and clarify which assets will be supported. This follows Meta’s announcement of the suspension of its Novi portfolio earlier this year and the failure of its Diem project which has not won any friends in Congress.
How will Zuck keep his promises?
Analyst Brian White of Moonness, Crespi, Hardt & Co. changed his price target for Meta stock from $ 230 to $ 250, while Truist Securities’ Yousseff Sharks believes the metaverse pivot reflects some of the early bets of company success: mobile and social media stories.
But the recruiting landscape is changing. Researcher Revelio Labs revealed that job postings for metaverse positions fell 81% in the second quarter, following a spike when Meta announced a name change from “Facebook” to “Meta” last fall. Silicon Valley tech workers in Bangalore are receiving a cold reception as the industry recession continues.
This leaves doubts as to how Zuckerberg will deliver on his promises to investors in the metaverse. During Wednesday’s earnings call, Zuckerberg explained that falling revenues necessitated long-term investment cuts and a suspension of hiring. Google, which continues to make progress in augmented reality, has also suspended hiring.
But the metaverse freelance job market, including the development of 3D environments and avatars, has more than quadrupled.
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