Meta released its earnings report from Q3
Meta’s net income has dropped over 50%, with costs rising by 19%
The metaverse division, Reality Labs reported a $3.67 billion loss
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Meta disclosed its financial report for Q3 of 2022: Zuckerberg’s big tech continues to struggle, especially in its metaverse division, Reality Labs.
The report posted falling sales for the first time since the company went public, which resulted in a 4% drop in revenue — down to $27.7 billion from $29 billion a year ago. The net income dropped over 50% from 2021, partly due to increased costs, which surged to 19%.
Meta’s metaverse division, Reality Labs, also suffered another big financial blow. Even though it made $285 million in revenue, the sub-company lost a whopping $3.67 billion. Meta also anticipated that Reality Lab’s operating losses would “grow significantly year-over-year.”
Expenses and costs are also estimated to increase for Reality Labs, mainly “driven by infrastructure-related expenses and, to a lesser extent, Reality Labs hardware costs.”
During the past year, the company hired 19,000 new employees and now has over 87,000 team members. So, it makes sense that Meta has stopped hiring new staff and will continue to lay off employees, especially those who don’t perform well.
However, Zuckerberg did remark on some positive views despite the challenge of increasing revenue growth.
“Our community continues to grow, and I’m pleased with the strong engagement we’re seeing driven by progress on our discovery engine and products like Reels,”Zuckerberg said.
Regarding the stock price, after the company released the quarterly earnings, it dropped by over 18% during after-hours. The stock is now at $114.20, a decrease of 65% from a year ago.
Since the company rebranded to Meta, the whole business model has changed, and the focus is now on the metaverse and VR. But has Zuckerberg gone too far? Capital expenditure is over $22 billion for 2022, with almost half destined for the metaverse alone. A Meta shareholder Brad Gerstner criticized Meta’s current business model and the high expenses of its metaverse expansion.
In August, the social-networking company had already posted losses for Reality Labs during Q2, which led to the company issuing a $10 billion bond offering to continue funding its investment campaign, including the metaverse.
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