Meta, formerly known as Facebook, is suffering massive losses as it invests heavily in its Reality Labs division. The company reported a staggering $13.7 billion in operating losses in 2022, with its metaverse-focused division alone recording a $4.28 billion operating loss in Q4.
While Meta still generates the majority of its revenue from online ads, founder Mark Zuckerberg is making a big bet on the metaverse concept, hoping that people will shop, play, and work in this shared digital universe. However, the development of VR and AR tech required for the concept to work is costing billions in R&D, with Meta debuting its $1,500 Quest Pro VR headset in October. Despite this, sales of VR headsets declined by 2% in 2022.
These costs have worried investors, with Meta losing nearly two-thirds of its value in 2022. Additionally, the company’s ads business faces pressure from competitors like TikTok and Apple’s privacy features, which have negatively impacted Meta’s ad targeting. In response, Meta announced in November that it will be laying off over 11,000 workers while continuing to invest heavily in Reality Labs.
Despite the scepticism of investors and the public, Meta has stated that it expects operating losses for Reality Labs to grow significantly year-over-year in 2023.
