Meta’s Metaverse Is Still Not Profitable: Reality Labs Unit Registers $2.8 Billion Losses During Q2

Meta, the social media company, has reported that its metaverse division, the Reality Labs Unit, is shedding lots of money. In its recent earnings call, the company informed that, while the Reality Labs unit managed to pull more than $400 million in sales, its losses reached $2.8 billion, mainly due to research and development costs associated with metaverse and VR products.

Meta’s Metaverse Push Is Making It Lose Funds

Meta, one of the first companies that announced a pivot from social media to the metaverse, is battling to make its new focus profitable. In its most recent earnings call, which reports on the economic performance of the company during Q2, the company announced that its metaverse division, the Reality Labs unit, had lost more than $2.8 billion dollars in the mentioned period, even when it manages to register more than $400 million in sales.

Reality Labs is in charge of the metaverse strategy of the company, including the development of virtual reality and augmented reality products and the research needed to build them. The monetization of Meta’s metaverse initiatives is still a work in progress, with its flagship VR app, Horizon Worlds, opening its monetization options to users, with the company keeping up to 50% of each sale.

Negative Predictions

Meta’s outlook for Q3 2022 is also negative. The company blamed this prediction on the:

continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty.

Mark Zuckerberg, CEO of Meta, also hinted at the possibility of layoffs during the next year, stating that “this is a period that demands more intensity and I expect us to get more done with fewer resources.” The company reported having increased its workforce by 32% since last year, with its headcount reaching 83,553.

In July, Zuckerberg made remarks on slowing the hiring strategy of the company and raising performance standards for current Meta employees.

On the metaverse side, the company also projected that Reality Labs would continue losing money in the next quarter. However, Zuckerberg has referred to this metaverse pivot as a long-term group of investments, as he believes that the metaverse will scale in time to house billions of users who all will be making transactions in the metaverse, with each one of these transactions being monetized by the company.

What do you think about Meta’s latest earning call and losses via the metaverse business? Tell us in the comments section below.

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