Since then, Meta has plowed billions of dollars into, and restructured itself around, the emerging technology – just as the global economy has slowed, inflation has soared and investors have begun paying more attention to costs.
The combination has been nothing short of disastrous. This year, Meta’s earnings have been hit hard by its spending on the metaverse and its slowing growth in social networking and digital advertising. In July, the Silicon Valley company posted its first sales decline as a public company. Its stock has plunged more than 60% this year.
On Wednesday, Meta continued that trajectory and indicated that the decline would not end anytime soon. It said it would be “making significant changes across the board to operate more efficiently,” including by shrinking some teams and by hiring only in its areas of highest priority.
The company reported a 4% drop in revenue for its third quarter – to $27.7 billion, from $29 billion a year earlier. Net income was $4.4 billion, down 52% from a year earlier. Spending soared by 19%.
The company’s metaverse investments remained troubled. Meta said its Reality Labs division, which is responsible for the virtual reality and augmented reality efforts that are central to the metaverse, had lost $3.7 billion compared with $2.6 billion a year earlier. It said operating losses for the division would grow “significantly” next year.
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For the current quarter, Meta forecast revenue of $30 billion to $32.5 billion, which would be down from a year ago. The company’s shares fell nearly 20% in after-hours trading.
Zuckerberg was defiant on a call with analysts Wednesday. He said people would “look back decades from now” and “talk about the importance of the work that was done here” regarding the metaverse, virtual reality and augmented reality.
Despite the challenges, Meta increased its numbers of users. The number of people who use its apps such as Facebook, Instagram, WhatsApp or Messenger daily increased to 2.93 billion users in the quarter, up 4% from a year earlier.
