Meta achieved its best quarter since 2021, but its metaverse endeavors continue to result in substantial financial losses. Despite this, the company remains committed to the metaverse, expecting even higher losses in the upcoming year.
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MENLO PARK, CALIFORNIA - FEBRUARY 02: A security guard stands next to a sign at Meta headquarters on February 02, 2023 in Menlo Park, California. Facebook's parent company Meta reported better-than-expected fourth quarter earnings with $32.17 billion in revenue.
Meta's Best Quarter Since 2021
Meta experienced one of its strongest quarters since rebranding from Facebook. TechCrunch reported that investors found solace in the company's 11% year-over-year revenue growth, especially considering that in the same period last year, Meta reported its first-ever quarterly revenue decline.
This positive performance is reflected in Meta's stock price, which plummeted during 2022 but has since rebounded, currently trading at approximately $298 per share after the markets closed today.
Meta's increased profitability can be attributed to its decision to lay off over 20,000 employees, significantly reducing personnel costs. While this correction to address over-hiring has undoubtedly had serious implications for those who lost their jobs, investors appear to be content with the improved financial results.
CBNC reported that Meta CEO Mark Zuckerberg had coined this downsizing initiative as "The Year of Efficiency," with a more positive spin on "mass layoffs," particularly when discussed during earnings calls.
Reaching a significant milestone, Reels have now collectively achieved 200 billion daily plays on Instagram and Facebook. This impressive growth has contributed to Meta's increased monetization revenue run rate, soaring from $3 billion in the fall to over $10 billion. Furthermore, the new platform, Threads, showed promising early results, according to Zuckerberg.
Despite early analytics data indicating a significant decline in Threads engagement since its launch, Zuckerberg remains optimistic about the app's potential. He revealed that more people are returning to the app daily than initially anticipated, which gives him confidence in the app's future growth.
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Meta Reality Labs
Despite these milestones, Reality Labs, the Meta division overseeing virtual and augmented reality projects, reported a staggering loss of $3.7 billion in the second quarter of 2023, with revenue reaching only $276 million, Engadget reported.
Moreover, Meta anticipates a further acceleration in metaverse spending. According to Meta CFO Susan Li, Reality Labs' losses are projected to increase significantly compared to the previous year when they incurred losses exceeding $13 billion.
Despite Meta's ambitious vision for the metaverse, the general public appears disinterested, especially since Apple has entered the AR/VR space this quarter. Zuckerberg maintains an optimistic outlook, especially when discussing Meta's investments publicly.
He reiterates their commitment to creating remarkable experiences that foster meaningful connections among people, and he firmly believes that their efforts to shape the next platform will unlock transformative possibilities for decades to come.
This visionary perspective underlines Meta's unwavering determination to drive innovation and redefine the future of technology and human interaction.
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