#TrendingNow: Investors Punish Zuckerberg over Costly Metaverse; Stock Down 20%
Investors rushed to dump Meta Platforms Inc’s stock in after-hours trading, pushing it down 20% and wiping $67 billion off its market value after the company posted its fourth straight decline in quarterly profit, news agency Reuters reported earlier Thursday.
“Wall Street is losing patience over Meta boss Mark Zuckerberg’s enormous and experimental bets on his metaverse project that helped drive up the company’s overall costs by a fifth in the third quarter,” the report added.
“Expenses Could Rise as Much as 16% Next Year”
The company said its overall expenses could rise as much as 16% next year and anticipates that operating losses at Reality Labs – the unit responsible for bringing the metaverse to life – “will grow significantly” next year, the report stated.
In the July-September quarter, losses at Reality Labs ballooned to a whopping $3.67 billion from $2.63 billion a year earlier. Revenue nearly halved, the Reuters report added.
“Super-sized and Terrifying”
One Meta shareholder had recently voiced concerns calling the company’s investments “super-sized and terrifying”. Analysts on Wednesday called them “confusing and confounding” and Meta’s inability to cut costs “extremely disturbing”.
“The metaverse … feels like a one big gamble given the economic crisis,” said Paolo Pescatore, an analyst at PP Foresight, adding that the journey ahead was going to be “long and painful”.
“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,” he added, as per the report.
“We’re Doing Leading Work that Will Become Mature Products Over the Next 5 to 10 years”
Mark Zuckerberg had said on a call: “It would be a mistake for us to not focus on any of these areas that will be fundamentally important to our future”.
“I know that sometimes when we ship a product … people say: ‘Hey, you’re spending all this money, and you’ve produced this thing,’ and I think that’s not really the right way to think about it.”
“…we’re doing leading work that will become … eventually mature products at different cadences in different periods of time over the next five to 10 years,” he added, as per the report.
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