What’s Going On Here?Meta gave a disappointing earnings update late on Wednesday, so Zuckerberg might well be pinning more hopes on his metaverse marvel than ever before. What Does This Mean?After Snap and Alphabet’s disappointing results over the last week, investors saw the writing on the wall for other ad-reliant companies, and Meta did nothing to prove them wrong. The social media titan brought in 4% more monthly active users across its platforms last quarter than the same time last year, but that didn’t bring the big bucks: the average price paid per ad dropped by 18%. Plus, Meta’s Reality Labs segment – which heads up all the firm’s ambitious metaverse advancements – made half the revenue it made this time last year, and racked up bigger losses too. That meant Meta’s overall revenue fell 4%, the company’s second-straight quarterly decline, while profit fell an eye-watering 52%. And don’t expect that to change anytime soon: Meta muttered a worse-than-expected revenue outlook for this quarter too. Investors flocked to the “unfriend” button, and sent its shares plunging 17%. Why Should I Care?For markets: Metaverse megabucks.
Once the coolest kid around, Meta’s shares are now down nearly 70% this year – a bigger drop than its hip and happenin’ tech peers. That might be because investors aren’t fully sold on its new-age metaverse venture: Meta’s dedicated division has racked up around $30 billion in losses in just three years, after all, and Horizon Worlds – the firm’s flagship VR app – is losing users as well as street cred. So in a bid to hedge their bets in case the metaverse dream doesn’t quite pay off, some shareholders want Meta to rein in its metaverse spending to just $5 billion a year.
The bigger picture: Brain power, schmain power.
Meta mightn’t be holding back on the metaverse yet, but it’s sure cutting back in some areas: the social media giant announced plans late last month to slash jobs for the first time since the company was founded in 2004. But with fewer heads to put together, the ones staying put will need to work extra hard if Meta wants to stop rivals like TikTok stealing the rest of its users. | 