Mark Zuckerberg’s ambitions for the Meta universe still look like a money pit, which has cost Meta tens of billions of dollars over the past two years. The company’s financial statements for the end of 2022 exacerbate previous large losses from Reality Labs, but Meta management remains committed to the venture.
Meta’s fourth-quarter 2022 financials show that its VR unit’s losses have increased compared to the serious money lost in previous quarters of the year. However, this has not prevented Meta stock from having one of its best days.
Reality Labs lost $4.3 billion in the fourth quarter of 2022. Including $3.7 billion burned in the third quarter, $3 billion sunk in the second quarter, and $2.96 billion dumped in the first quarter, the Meta Metaverse division’s loss for 2022 is $13.7 billion. This figure follows the $10.2 billion that Reality Labs lost during 2021.
As costs rose last year, CEO Mark Zuckerberg argued that the company’s efforts would pay off in the next decade, and that thinking hasn’t changed. In the fourth-quarter earnings report, CFO Susan Lee said Meta expects Reality Labs to lose more money in 2023, but will continue with what it considers a long-term investment.
Last year, Meta released its latest virtual headset for enterprise operations, the $1,500 Quest Pro . This year, the company plans to release a cheaper, consumer-oriented model to replace the Meta Quest 2. However, sales and shipments of virtual reality headsets in 2022 are down from 2021, casting doubt on Meta’s focus on this sector.
The Meta VR division also lost legendary programmer John Carmack last year. He left the company in December after repeatedly expressing concerns about the ineffectiveness of its approach to creating the Meta universe. Meta also laid off 11,000 employees in the previous month, about 13% of its staff.
Harsh numbers from Reality Labs accompany Meta’s annual revenue and Q4 revenue losses. Q4 revenue fell 4 percent to $32.2 billion, and net income for the quarter fell 55 percent to $4.7 billion. Total revenue for 2022 fell 1 percent year over year to $117 billion, and net income for the year fell 41 percent to $23 billion.
While the numbers look bleak, they exceeded analysts’ expectations. Because the glass is half full, and because Meta announced a $40 billion stock buyback, the company’s stock rose this week. Meta’s market capitalization rose 27 percent in one day, more than a jump of more than $100 billion.
Although the stock had its best day in a decade this week, this only brings it back to where it was last June. Meta never started to recover the half-trillion dollars it has lost since late 2021.