Profits for the quarter fell 8 percent, or $10.3 billion, down from one year earlier. The stock of Meta fell approximately 22 percent in late-night trading.
Mark Zuckerberg said his company was planning to go all-in on the metaverse in the past year. He spoke on Wednesday and laid out the costs associated with making the change.
Meta The company was founded by Mr. Zuckerberg founded as Facebook has announced the company’s Reality Labs division, which produces virtual reality goggles, smart glasses , and other products that are yet to be released that lost more than 10 billion by 2021 while it developed the business. These products are essential for his. Zuckerberg’s vision for his metaverse which is a new generation of the internet in which users can create immersive virtual environments and stories through various hardware and software platforms.
The first time Meta announced the performance from its division for hardware. Prior to this it had not disclosed the numbers due to the fact that devices like VR headsets were only a tiny part of its business overall, that is reliant on social networks as well as digital ads. Investing $10 billion into the metaverse is over five times the amount Facebook paid to acquire Oculus VR in 2014. Oculus VR business in 2014 and 10 times the amount it paid for the acquisition of Instagram the company in 2012.
The expenses has slowed Meta’s quarterly earnings that fell by 8 percent to $10.3 billion during the three months that ended in December, compared to one year ago, the revenue increased by 20 percent, reaching $33.7 billion over the same time. Wall Street analysts had predicted that the company would earn $10.9 billion on revenues that was $33.4 billion.
However, Meta said its social networking business including Facebook and Instagram — were hit by another change initiated by a rival technology giant. Meta stated that it was expecting its business’s financial performance to be affected due to Apple’s modifications in its operating system for mobile devices that is, the iPhone maker changed the way it made it harder to allow apps to track iPhone users’ habits on the internet. This has affected social media companies as they have less data for providing targeted advertisements to users. Meta claimed that the change would result in a loss of around 10 billion dollars in advertising income this year.
The greater spending on the metaverse as well as the effects of Apple’s changes have come together to create a challenging transition for Facebook as it transitions to Meta. The results were quite unusual for a company that over the decades has delivered amazing financial results like clockwork, while enduring controversy over privacy, inaccurate information as well as other harmful media. On Wednesday, in reaction to the report’s findings, Meta’s shares plummeted by 22 percent after hours trading.
“It is time for a reality check on Meta’s position for the metaverse,” said Raj Shah, a technology analyst at Publicis Sapient, a digital consulting firm. “The metaverse is a long way from being profitable or filling the gap in ad revenue after Apple’s policy change.”
In a meeting with investors following the announcement of the company’s financial results in a call with investors, the company’s chief executive, Mr. Zuckerberg, Meta’s chief executive, seemed to acknowledge the challenges. “Although our direction is clear, it seems that our path ahead is not quite perfectly defined,” the executive declared.
However, he also supported the metaverse’s evolution and noted that his company had faced problems before. “Ultimately, our continued success relies on building products that people find valuable and that people want to use,” Mr. Zuckerberg said.
Since its beginning, Meta has tried to move towards becoming more independent of Apple as it holds the crucial information to iPhone consumers, but also also to get away from social network controversy involving hate speech. So , in October, Mr. Zuckerberg announced that he wanted his company to embark on an entirely new route towards the metaverse. He rebranded Facebook to Meta. Since it was renamed, the company begun a major internal change that has resulted in restructuring the company and encouraging workers to be part of teams that work on augmented and virtual reality.
Meta’s expenditure is not likely to stop in the near future, particularly since it’s in a full-throttle competition with other tech giants to gain ground in the metaverse. This month the news broke that Microsoft announced that it was purchasing the maker of video games Activision Blizzard for nearly $70 billion, the game maker claimed that the acquisition was an element of the metaverse, despite the fact that Activision doesn’t make virtual real-world games. Google has been developing metaverse-related technologies for a long time and Apple already has gadgets being developed.
In the same way Meta’s highly profitable businesses are currently in an era of transition. Sheryl Sandberg Chief Operating Officer of Meta spoke on the conference call with investors on Wednesday that Instagram is heavily promoting the launch of a video service known as Reels that competes with TikTok. Although Reels is the most significant factor in the growth of Instagram however, it doesn’t earn enough money from advertisements as other Instagram services like Stories and the main picture feed.
In the conference call during the conference call, the caller. Zuckerberg also pointed to the challenges in facing off against TikTok which has become more popular among younger users. David Wehner, Meta’s chief financial officer, also said that Apple’s iOS modifications have boosted the advertising business of Google and isn’t dependent on Apple to provide advertising data.
Alphabet Google, Google’s parent company Alphabet, Google’s parent company, on Tuesday announced an increase of 36 percent in profits and an increase of 32 percent in revenue for the last quarter of 2021 over one year ago.
Yet, the number users of Meta’s social network apps grew. The active monthly users of Facebook, Instagram, WhatsApp and other apps grew by 9 percent to 3.59 billion, during the first quarter of this year from prior, according to the company. The company said there are more than 1 billion people connect to business accounts through applications like WhatsApp and Messenger each week.
The main Facebook app seemed to have hit the ceiling in certain markets. The app lost 1 million users worldwide in the quarter for the first time during the quarter, a decrease from the previous quarter.
Meta has also revealed plans to change its ticker symbol so that its shares be traded under the ticker META at the Nasdaq exchange instead of FB.