Meta Platforms, led by Mark Zuckerberg, has reported significant financial setbacks in its metaverse division, Reality Labs. The company announced a loss of $4.5 billion in the second quarter of this year, pushing the total loss for its metaverse ventures to nearly $60 billion since 2019. Despite these losses, Meta recorded $49 billion in revenue for the quarter, marking a 22% increase from the same period last year.
Why Is Meta Focusing on AI?
In contrast to the losses in its metaverse division, Meta reported a substantial profit of $13.5 billion, largely attributed to advancements in artificial intelligence. Zuckerberg pointed to the growth of applications such as Threads and WhatsApp as key contributors. The company’s stock surged by 7.1% in after-hours trading, exceeding analysts’ expectations.
Zuckerberg highlighted the impressive trajectory of Meta AI, their assistant, which is set to become the most used AI assistant globally by the end of 2024. The AI-powered Ray-Ban Meta smart glasses, launched last September, also showed promising sales momentum.
What Are the Details on Reality Labs?
Reality Labs, Meta’s metaverse research arm, earned $353 million in second-quarter sales but still posted substantial losses. Since its creation in 2019, the division has accumulated a total loss of $59.9 billion. Despite these ongoing deficits, Meta plans to boost capital expenditures in 2025, focusing more on AI research and development.
Key Insights from Meta’s Strategy
– Despite heavy losses in the metaverse, Meta’s AI advancements are yielding significant profits.
– The company plans to increase capital expenditures in AI research and development.
– Young users are increasingly using Facebook Marketplace, contrary to popular belief about the platform’s demographic.
Looking ahead, Meta’s CFO Susan Li acknowledged that the operating losses for Reality Labs are expected to rise year-over-year. This increase is attributed to ongoing product development in augmented and virtual reality, as well as further investments in building the metaverse ecosystem.