Mark Zuckerberg comes to terms with reality: his dream of the metaverse seems to be crumbling. Meta’s Reality Labs, which develops the metaverse, has in fact lost 9.4 billion dollars in nine months. Wall Street seems to have had enough of the situation: the reaction of the markets to the publication of the quarterly accounts has been disastrous.
The stock burned $ 65 billion in capitalization, with an 18% drop in Wall Street after hours trading on Wednesday, October 26. Zuckerberg does not want to give up however: “I am convinced that we are going in the right direction.
Our community continues to grow and, even if we face revenue challenges in the short term, the fundamentals point to the return of strong growth.” Compared to the same period last year, the net profit of Zuckerberg’s company more than halved to $ 4.4 billion, with revenues of $ 27.72 billion.
Analysts explained, “We believe that in the short term, Meta’s top line will remain under pressure as higher interest rates weigh on economic growth and demand for online advertising.”
Mark Zuckenberg defends his metaverse dream, but Wall Street is fed up
Added to this are the stiff competition from TikTok, Apple’s privacy changes that limit companies’ advertising targeting, concerns about the massive investments needed for the Metaverse.
The Metaverse is struggling to catch on and many users have already abandoned the service. According to some internal documents of the Meta company published by the Wall Street Journal, Horizon World, the main service offered to consumers, currently has less than 200,000 monthly users.
Meta also predicted significantly larger losses for Reality Labs in 2023. BofA explained: “On a total company basis, including investments in the metaverse, our valuation reflects a discount to the S&P 500, given the deceleration of topline growth, growing competition for user attention and ad dollars, and large investments in the Metaverse that put pressure on earnings. ”
