Last October, Mark Zuckerberg announced to the world that he was entirely immersed in the metaverse, and that the effort would only become costlier over time.
He’s lowering his rhetoric now that his company’s stock price has dropped in recent months.
Because of “our present business growth levels,” Meta would “slow down the speed of some of our investments,” Zuckerberg said during the company’s first-quarter earnings call on Wednesday.
In the first quarter, Meta’s profit was $7.5 billion, down 21% from the same period a year ago. The company’s revenue increased 7% to $27.9 billion, the weakest growth rate since it went public a decade ago. Its spending plan for 2022 has been reduced by $3 billion.
Make no mistake: Zuckerberg continues to pour billions of dollars into developing tools and software for the Metaverse, a notion he believes will one day eclipse the mobile Internet.
Meta’s Reality Labs subsidiary, which produces the Quest VR headset and future AR glasses, employs over 17,000 people and lost roughly $3 billion in the most recent quarter.
The issue is that Meta’s investors are hesitant to commit so much money right now, especially because the payback is years away.
The price of a stock can sometimes tell you everything you need to know about it. Since it was rebranded from Facebook last October, the Meta’s price has decreased by nearly 50%, evaporating the previous five years of development.
That’s when Zuckerberg stated that he was already spending $10 billion a year on Reality Labs and that he expected the investment to grow, despite the fact that he wouldn’t see any profits until the second half of this decade at the earliest.
Investors would have reacted positively to the meta pivot if their core business of ad-driven social networking had been expanding at the same rate as in prior years.
But the timing couldn’t be worse: Facebook is growing at a slower pace than it has in the past, owing in part to the exodus of younger users. Time spent on Facebook and Instagram is being eaten up by TikTok. And Meta has already lost more than $10 billion due to Apple’s ad tracking adjustments.
Meanwhile, regulations have restricted Zuckerberg’s ability to make large, transformative social media acquisitions that may re-ignite growth.
Facebook is still expanding, but at a far slower rate than in the past. Blue App managed to gain daily users by only 4% to 1.96 billion in the previous quarter, after reporting its first dip in daily users for the fourth quarter of 2021, while daily users on Instagram, WhatsApp, and Facebook increased marginally to 2.82 billion. From 2.87 billion to 2.87 billion, tucked.
After better-than-expected profits per share were already decreased by Wall Street, Meta’s stock climbed more than 15% in the first quarter.
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