Meta $4.5 billion loss in the last 3 months. Metaverse bubble destruction domino activated?
2024-08-02 13:44:00
Meta Platforms, under the leadership of CEO Mark Zuckerberg, announced a substantial loss of $4.5 billion in its metaverse division,
Meta Platforms, under the leadership of CEO Mark Zuckerberg, announced a substantial loss of $4.5 billion in its metaverse division,
Reality Labs, for the second quarter of 2024. This brings the total losses for Reality Labs to nearly $60 billion since its launch in 2019. Nevertheless, Meta's overall performance surpassed expectations, with the company's stock price climbing 7% in after-hours trading following the release of its Q2 earnings report.
Strong Q2 Earnings and AI Developments
During its earnings call on July 31, Meta reported revenues of $49 billion, marking a 22% increase from the previous year and the second-highest quarterly revenue in the company's history. The tech giant also achieved a profit of $13.5 billion, largely fueled by advancements in artificial intelligence and the growth of its applications, including Threads and WhatsApp. Zuckerberg emphasized that the company’s AI assistant, Meta AI, is on track to become the most widely used AI assistant worldwide by the end of 2024.
Meta's AI initiatives have also expanded into consumer products, such as the Ray-Ban Meta smart glasses. Launched in September of the previous year, these AI-enhanced glasses have experienced “good traction” in sales, according to Zuckerberg. The company plans to significantly boost its capital expenditures in 2025, with a focus on AI research and development.
Reality Labs’ Ongoing Losses and Future Investments
Reality Labs, which develops virtual reality headsets like the Meta Quest 3, reported $353 million in sales for Q2. However, the division faced a staggering loss of $4.5 billion for the quarter. Despite these ongoing losses, Meta’s chief financial officer, Susan Li, noted that operating losses for Reality Labs are expected to “increase meaningfully” year-over-year due to continued investments in augmented and virtual reality product development.
In a departure from the common perception that Facebook primarily attracts older users, Li pointed out that younger demographics are increasingly engaging with Facebook Marketplace. This trend, along with other strategic initiatives, is part of Meta’s broader strategy to diversify its user base and enhance its ecosystem.
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fozooo
Given the current tense situation, there is a noticeable trend among financially savvy individuals with significant liquidity to gravitate towards risk-averse assets and stores of value. However, the Metaverse does not possess any of these qualities.
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parole
It can be worse than this
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frank
very nice
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Osman Razeq
Exactly according to the author's opinion, unfortunately, why should it become the truth that despite the sharp drop of meta, which is prominent among the metaverse projects, if the second wave of the downward crypto market coincides with it, it can bring disaster for the smaller metaverse projects.
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jak
Oh no...
Bearish market again
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michel
When the meta is falling with that power, we shouldn't expect more from small projects with a weak foundation.
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alex.m
Of course, in the same way that this correction can be continued, the opposite can also happen, maybe this is the last discounts of the stock market and cryptocurrencies, or the famous so-called, maybe we are close to the golden support of the market, or maybe right now, as we are reading this, the price is the best. It may be a profitable point for a purchase.
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