Four years after Mark Zuckerberg renamed Facebook to Meta, the company has spent $45 billion to develop the Meta Universe. However, the results so far look questionable, with critics calling the project a “financial disaster.”
According to TechSpot, the initiative has become a veritable financial abyss, absorbing $45 billion by early 2025-an amount commensurate with the market capitalisation of Meta’s competitors such as Snap and Pinterest, which is also roughly equivalent to the cost of Twitter’s acquisition by Ilon Musk.
Yahoo Finance correspondents spoke to former top executives at Reality Labs, Meta’s augmented and virtual reality technology division. They described it as” dysfunctional and disorganised”, with frequent management reshuffles and chaotic structural changes. Many managers were transferred from other departments within the company without the necessary experience in AR and VR, which only exacerbated the problems.
Financial reports show that Reality Labs’ losses have increased significantly: $6 billion in 2020, $10 billion in 2021, $13 billion in 2022, and $16 billion in 2023. The division lost another $3.8 billion in the first quarter of 2024, more than its combined revenue for 2022 and 2023.
At the same time, Reality Labs’ annual profits continue to decline due to weak sales and failure to attract a mass audience. Deepwater Asset Management analyst Gene Munster believes this line of business is unsustainable and negatively impacts Meta’s stock.
Although some investors are hopeful about the long-term success of AR and VR, their optimism is fading. Without rapid mass adoption, annual losses of $10-15 billion on Meta Universe could become unsustainable for the company.