Zuckerberg Reaffirms Commitment to Metaverse Despite Money Loss
Meta reported a nearly $4 billion loss from its metaverse unit with Reality Labs in what was otherwise a solid first quarter for Meta that posted a final profit of $5.7 billion.
The metaverse for Meta is not a business, but a money-burning machine. The company presented the financial results of the first quarter of 2023 and, once again, the unit destined to make this ambitious project a reality, Reality Labs, has registered an operating loss of almost $4 billion. And will continue to have these losses further on.
However, the company reported an increase in year-over-year revenue for the first time in three quarters. These great results followed pretty harsh restructuring, resulting in more than 10,000 jobs eliminated earlier this year.
Despite big losses in the metaverse investments and the talks about focusing on AI, CEO Mark Zuckerberg made it a point to tell investors that he is not making a U-turn into the AI lane. Rather, he sees AI as technology that works in tandem with the metaverse.
“A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say up front that that’s not accurate. We’ve been focusing on AI and the metaverse, and we will continue to.”
Meta’s work on AI will be divided into two key areas – a “massive recommendations and ranking infrastructure” tied to core features such as feeds, Instagram Reels and digital ads, and “new generative foundation models” that are enabling entirely new classes of products and experiences. User time spent on Instagram has increased by more than 24% – a trend Zuckerberg attributed to AI-powered recommendations for Reels, the company’s answer to TikTok’s video feed.
In the first quarter of 2023 the company has added another half a billion of severance (employee layoff) costs to the nearly $1 billion incurred during November 2022 layoffs. Similar to the last year, most of the people were from Research and Development functions.
Apart from the Reality Labs' losses, the quarterly report got a positive reaction from the market. Meta stock has grown 35% over the last 5 days since the announcement, according to Google Finance. We continue to Observe.
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