If there’s one thing investors hate to hear, it’s that your profits are down. Another thing they’re not too keen on is when you say that you’re going to carry on ploughing billions into a nebulous concept with no immediate profits in sight.
“Hey wait, come back…”
That’s the double-helping of bitter pills that Meta dished out in its latest quarterly earnings call yesterday as it announced profits of 'just' $7.5 billion for the latest quarter, down 21 per cent from a year earlier.
This comes on the back of a financial report in February warning of falling profits and slowing user growth which caused Meta stock to drop 26% as its market value dropped $230 billion in a day. And the previous quarter results that was Meta’s (Facebook’s) first quarterly profits drop (so that’s two in a row, folks).
Plus Russian bans on Facebook and Instagram continue to hit the company squarely in the pocket. Plus this year’s scrapped developer conference…
Things can only get Meta
Still there’s light at the end of the tunnel, as Mark Zuckerberg promised that massive metaverse spending would continue, saying that, “We remain confident in the long-term opportunities and growth that our product road map will unlock”.
In a sense, it’s commendable that Meta is being so proactive in their pivot – seeking to actively do something to counter increasing user apathy and competition from rivals such as TikTok – but increasingly, Meta - and its love of all things metaverse - is looking like a no-go for anyone wanting to make a fast Zuck Buck.
OK. Metaverse. We get it. So when?
We may have to wait until late this decade before Meta’s costly expansions in VR, retail venues and innovations pay off. If ever. Focusing on just one of the expanding Meta metaverse arms, the Reality Labs division - which makes the Quest VR headset and is developing future AR gear - employs about 17,000 staff and was single-handedly responsible for losing $3 billion last quarter. Not a good look.
The first glimmers of a metaverse payday are on the way, however, as development of the Horizon social media platform for desktop (currently only in Quest headsets) continues with Meta already banking on grabbing a sizeable share of creator’s profits.