Meta Incurs $3.74B Loss Metaverse-related Losses in Second Quarter
Meta’s quest for metaverse building business exhibited struggles as the parent of social media giant Facebook reported $3.739 billion in losses. Besides the loss, the tech player revealed spending $7.7 billion towards the virtual reality (VR) segment in 2023.
Meta revealed in its second-quarter reports issued on Wednesday, July 26, realizing 11% growth in its revenue relative to a similar period in 2022. In particular, its quarterly revenue approximated $31.9 billion in 2023 compared to the $28.8 billion it earned in Q2 of 2022.
Reality Labs Realize Huge Revenue Decline as Losses Increase
Meta’s realized increased revenue within the Family of Applications segment by $3.353 billion from $28.822 billion in Q2 of 2022 to $31.999 billion in 2023. A notable occurrence was the declined revenue within the metaverse-oriented Reality Labs by nearly 40%, from $452 million in Q2 2022 to $276 million in 2023.
The corresponding operating income rose from $8.358 billion in Q2 2022 to $9.392 billion in Q2 2023. The increment is attributed to higher operating income from Family of Apps, which realized $13.131 billion in 2023 compared to $11.164 billion in the second quarter of 2022. Reality Labs eroded the gains through increased losses from $2.806 billion in Q2 2022 to $3.739 billion in 2023. It took strong performance from the Family of Apps for the operating margin to rise from 25% to 29% in Q2 2023.
The Meta’s chief financial executive Susan Li revealed that the revenue dip arose from the low sales realized by the Quest 2 VR headset. Also, the Virtual Reality department suffered higher expenses by 23% to $4 billion. The increment emerged partly from higher staffing costs.
Reality Labs is set to incur rising operating losses in 2023. Meta attributes the losses to the expenses incurred in the ongoing VR-related product development. Also, the losses are inevitable as the group commits to further investments within the metaverse-based projects.
Meta Admit Overlap and Complementary Attribute in Metaverse and Artificial Intelligence
Meta chief executive Mark Zuckerberg indicated that the firm would prioritize artificial intelligence (AI) and pursue metaverse in the longer term. He restated Meta’s commitment to pursue the metaverse alongside AI investments. Given the overlap and complementary attributes exhibited by the two areas, he considered the duo pursuit necessary.
Zuckerberg revealed that the AI model Llama would soon support building several products. It targets facilitating users to develop worlds where avatars would inhabit. He promised to issue detailed statements at a future date this year.
The revelation of the impressive Quarter 2 performance by the Zuckerberg-led Meta triggered a 7% rally in the stock price. Its stock’s price rose to exchange hands at $320, as indicated by Google Finance.
Meta’s share opened at $325.12 and tested the day’s high of $325.35 before retreating to its lowest at $312.12. A review of the market performance using Google Finance at press time 18:51 UTC shows Meta Platform Inc stock price is $314.24 marking a 5.25% gain in the past 24 hours.
The day’s high is the 52-week week high for a share that today edged closer to 140% growth in its year-to-date performance. Nonetheless, Meta’s stock prices are still off the $378 level, the all-time high realized in September 2021.
Analytic Firm Shows Declined User Activity in Threads
The debate pitting metaverse versus AI pursuit at Meta arose on July 6 when Zuckerberg indicated that the newly unveiled Threads defied the management’s expectations to register huge returns. He indicated that the Meta resources prioritize user retention for Threads and then consider its growth and monetization.
Zuckerberg’s comments on Threads’ performance contradict the report published by data analytics firm Similarweb. The firm revealed in its Wednesday, July 26 report that Threads users have declined by 60% since its unveiling.
Similarweb indicated that Threads daily active users declined from a peak of 49 million for the Android platform. The figures plunged from the July 7 peak to realize 12.6 million active users by Sunday, July 2023.
The analysis showed that users would spend five minutes at most daily during the past week. Although Similarweb admitted it lacked the numbers for the Apple iOS, it predicted to replicate the boom-and-bust pattern witnessed in Androids.
Editorial credit: mundissima / Shutterstock.com
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