Meta's shares fell 20% after its quarterly earnings release, lowering the company's market capitalization by $65 billion to $350 billion. Investors were disappointed by the results: Meta's revenues fell 4% to $27.7 billion for the quarter. Net income fell 52% to $4.4 billion, according to Business Insider.
The company said it has spent more than $9 billion this year on Reality Labs, the segment that develops the meta-universe, with $3.7 billion of that in the third quarter alone. In 2021, it has spent almost $10 billion on the segment, and spending on Reality Labs will only grow from there. As Meta CEO Mark Zuckerberg explained in a conference call with analysts, Reality Labs spending will increase in 2023 due to the launch of a new virtual reality headset.
Investors and analysts appear to be concerned about the costs of the meta universe. Earlier, Altimeter Capital, a major investor in Meta, wrote an open letter to the company titled "Time to get in shape" asking it to limit spending on the segment to $5bn a year. Wall Street analysts have also drawn attention to the slow pace of development at Meta.
"Captain Zuckerberg continues to steer the Meta ship down an unknown path called the meta-universe and is determined to spend billions and billions of dollars trying to reinvent itself," said Neil Campling, head of TMT research at Mirabaud.
The company's overall costs are also rising. In 2022 they will be between $85bn and $87bn, next year between $96bn and $101bn.