Facebook facing ‘terrifying losses’ as shares plunge but Zuckerberg insists on VR future

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Facebook and Instagram’s parent company Meta has reportedly been warned they are facing “supersized and terrifying losses” due to their focus on the futuristic metaverse – while owner Mark Zuckerberg has insisted it’s the way forward. Meta has seen their shares plummet by 61.6 percent since the year began – with a drop of 5 percent hitting the company today. Recent figures paint a damning picture for the tech giant’s plans of a virtual world used by millions of people primarily via VR headsets, with Reality Labs, the section of the company responsible for building it, losing £3.16billion between July and September compared with £2.27 billions during the same period in the previous year. The company has been told it is “no longer an innovative ground breaker” as their net income for the third quarter fell by a massive 52 percent to £3.9 billion, according to S&P Capital IQ.

This was the first time in almost a decade since Meta’s profits fell for four consecutive quarters – and the company reports that revenues could drop as low as around £26 billion in the fourth quarter.

Meta’s revenues also fell by 4 percent to £24.3 billion, representing the slowest pace of growth since the company went public in 2012. The crash in the company’s stock appeared to hit after Meta warned that losses linked to the metaverse “will grow significantly” next year.

According to Sky News, analysts branded the focus on the metaverse as an experimental bet causing “supersized and terrifying losses”.

When asked why his company continues to focus on the futuristic technology, owner Mark Zuckerberg said: “It would be a mistake for us to not focus on any of these areas that will be fundamentally important to our future.”

But Insider Intelligence analyst Debra Aho Williamson warned that Meta needs to adjust its focus on fixing its core business, saying the company was on “shaky legs when it comes to the current state of its business”.

She added: “As Facebook Inc it was a revolutionary company that changed the way people communicate and the way marketers interact with consumers. Today it’s no longer that innovative ground breaker.

“Mark Zuckerberg’s decision to focus his company on the future promise of the metaverse took his attention away from the unfortunate realities of today: Meta is under incredible pressure”.

Experts have slammed the plans for the Metaverse, with the VR headsets necessary for the best experience of it remaining extremely expensive for most consumers.

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Paolo Pescatore from PP Foresight said: “People are not rushing out of their seats to buy a VR headset or even watch 360-degree videos … The new device still feels like an expensive toy.”

Neil Campling, of Mirabaud Equity Research, added: “The frustration for Meta investors is that Mark Zuckerberg seems to be wearing a pair of Oculus VR glasses 24/7 and hasn’t realised that his VR isn’t aligned to R (aka Reality, aka Returns, aka Responsibility, to shareholders).”

The CEO of Altimeter Capital, who invests in Meta, said in an open letter to the company: “Meta has drifted into the land of excess – too many people, too many ideas, too little urgency. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”

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Brad Gerstner used the letter to urge the company to slash its yearly investment in the metaverse from $10 billion to $5 billion. The company’s revenue has dropped partly as a result of advertisers tightening their budgets in anticipation of economic slowdown.

While Meta’s Facebook, Instagram and the messaging services WhatsApp and Messenger continue to maintain 2.93 billion daily active users across all platforms, almost all of the revenue from these is via advertising sales.

Mark Zuckerberg, Meta’s chairman and chief executive, said: “While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We’re approaching 2023 with a focus on prioritisation and efficiency that will [see us] emerge an even stronger company.”

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