Jeff Bottari/Zuffa LLC
- Meta has so far lost more than $40 billion on metaverse projects and expects to lose more.
- Mark Zuckerberg is holding fast to his sense that "this is the direction the world is going in."
- Suddenly, Wall Street is feeling more forgiving. Here's why.
Wall Street is starting to come to terms with the massive amount of money Mark Zuckerberg keeps pouring into the metaverse.
With second-quarter results out, collective losses from Reality Labs, the metaverse unit at Meta, has now surpassed $40 billion and more financial pain is on the way. Yet, investors sent Meta's stock up 7% on Wednesday, after hearing Zuckerberg's explanation of why he continues to spend so heavily in a still largely unproven area.
"This is a very long-term bet," Zuckerberg said on a call with analysts. "I can't guarantee you that I'm gonna be right about this bet. I do think that this is the direction that the world is going in."
Zuckerberg went on to explain the various consumer tech trends he's noticed, leading him to believe that a more immersive version of the internet will become the norm in the years ahead.
"There are, you know, a billion or 2 billion people who have glasses today. I think in the future, they're all gonna be smart glasses and all the time that we spend on TVs and computers, I think that's gonna get more immersive and look something more like VR in the future," Zuckerberg said. "What we're seeing is richer ways for people to communicate across even the mobile apps that we have going from text to photos to videos, just this continual trend towards being more immersive. All of these trends line up to make me think that this is the right thing. I think we're going to be happy that we did this."
This time, analysts hassled Zuckerberg much less on metaverse spending than they have in previous quarters. The difference: Last year, Meta reported slowing or negative revenue growth. Now, much of the focus during the call was on Meta's AI projects and the surprising growth and success of Threads.
Wall Street's acceptance of metaverse spending is likely related to Meta's overall business performance improving. Revenue increased in the second quarter, and is expected to increase again in the next. Meta has done huge layoffs and cut expenses in other ways.
This means Zuckerberg is moving closer toward making good on his promise last year that he would grow revenue and profit from Facebook, Instagram and WhatsApp enough to cover the continued costs of the metaverse.
During the second quarter, profit from that family of apps increased by $2 billion, while losses from Reality Labs came in at $3.7 billion. So a little more than halfway there.
Are you a Meta employee or someone else with insight to share? Contact Kali Hays at khays@insider.com, on secure messaging app Signal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a non-work device.
from Business Insider https://ift.tt/GRzQpa7
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