Meta lost $13.7 billion on Reality Labs in 2022 as Zuckerberg's metaverse bet gets pricier

Mark Zuckerberg's imagination of a aboriginal successful the metaverse is costing investors a boatload of money.

In its earnings report aft the doorbell connected Wednesday, Meta said its Reality Labs division, location to the company's virtual world technologies and projects, mislaid $4.28 cardinal successful the 4th quarter, bringing its full operating nonaccomplishment for 2022 to $13.72 billion.

It was a pugnacious archetypal afloat twelvemonth for the caller Meta, the institution formerly known arsenic Facebook. In precocious 2021, Zuckerberg changed the company's name and said its aboriginal would beryllium successful the metaverse, a integer beingness wherever radical volition work, shop, play and learn.

For now, it's conscionable a outgo center, and Meta is inactive an online advertisement company.

Reality Labs generated $727 cardinal successful the 4th quarter, and $2.16 cardinal successful gross for each of 2022 -- a diminution from $2.27 cardinal successful 2021 -- including income of Quest headsets. In different words, the part mislaid much than six times the magnitude of wealth it generated successful revenue, portion accounting for little than 2% of full income astatine Meta.

Analysts were expecting Reality Labs to grounds an operating nonaccomplishment of $4.36 cardinal successful the 4th fourth connected gross of $715.1 million, according to StreetAccount.

Sales of VR headsets successful the U.S. declined 2% successful 2022 from the anterior twelvemonth arsenic of aboriginal December, according to information shared with CNBC by probe steadfast NPD Group.

In July, Meta announced it was raising the terms of its Quest 2 VR headset by $100. The institution said astatine the clip that the terms hike was indispensable to relationship for inflationary pressures. Meta then debuted its much costly Quest Pro VR headset successful October, pitching it to companies arsenic an endeavor workplace instrumentality for $1,500. This week, Meta is moving a merchantability connected its high-end VR headset, shaving disconnected $400 for a constricted time.

Zuckerberg told CNBC's Jim Cramer past summertime that helium hopes to "get to astir a cardinal radical successful the metaverse doing hundreds of dollars of commerce" by the 2nd fractional of the decade.

But earlier the Facebook founder's dreams go a reality, Meta has to walk galore billions of dollars processing the VR and augmented world technologies that underpin the conception of the metaverse.
The institution said past twelvemonth that it expects "Reality Labs operating losses successful 2023 volition turn importantly year-over-year."

"Beyond 2023, we expect to gait Reality Labs investments specified that we tin execute our extremity of increasing wide institution operating income successful the agelong run," Meta said astatine the time.

Shareholders person been little than thrilled with the results truthful far. Meta mislaid astir two-thirds of its worth last year arsenic metaverse costs soared and the company's halfway online advertisement concern suffered from a struggling economy, accrued contention from TikTok and Apple's privateness update, limiting advertisement targeting.

The institution connected Wednesday reported fourth-quarter results that bushed analysts' gross estimates and announced a $40 cardinal buyback, sending the banal up much than 17% aft hours.

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