Mark Zuckerberg firmly believes that—when it comes to his leg-less, blank-eyed, poorly-rendered chalk-drawing of a virtual world known as the Meta metaverse—someday soon, he’ll be the one laughing. Or at least, that’s the gist of what he told investors in his company’s third-quarter earnings call on Wednesday.
Zuck acknowledged that there are metaverse haters out there, “I know that sometimes when we ship a product, there’s a meme [see: memes] where people say, ‘Hey, you’re spending all this money, and you’ve produced this thing.’” Yet the CEO and Facebook founder doesn’t see their point. “I think that’s not really the right way to think about it...I think the teams are making very good progress. And I think that this will be fundamentally important for the future. Nothing that we’re seeing suggests that that’s not going to be the case,” he said.
Granted, observing the product itself makes it pretty difficult to believe that Meta’s Horizon Worlds or any other aspect of the company’s metaverse will ever be “fundamentally important”—even with the graphics updates. But reality (and the virtual reality) didn’t stop Zuckerberg from doubling and tripling down in the face of repeated questions about the big bucks being funneled towards metaverse projects. “I think it’s some of the most historic work that we’re doing that I think people are going to look back on decades from now and talk about the importance of the work that was done here,” he claimed. Sure.
For context, the company has dropped nearly $9.5 billion on metaverse and virtual reality projects over the last nine months, according to its Q3 report. And about $3.7 billion alone between July and September. Meanwhile, Meta has only brought in $285 million in revenue from its VR work in the last quarter, and $1.4 billion in the fiscal year so far. It’s operating and developing the metaverse at a massive loss.
And all of the other tentacle arms of Meta aren’t doing so hot either. The company’s revenue fell by 4% between this year and last, and its overall profit dropped by 52%. Zuckerberg at least acknowledged that his company is facing “near-term challenges,” and admitted that aspects of Meta will have to shrink. “We expect to end 2023 as either roughly the same size, or even slightly smaller organization than we are today,” the CEO said.
Part of that shrinkage is likely to be very literal. The company’s soon-to-be-former CFO Dave Whener repeatedly referenced that Meta is “consolidating [its] office facilities footprint.” Which was one the few financial decisions discussed in the investor call that seems logical, especially considering that the company has fully embraced a flexible, remote work policy.
Otherwise, Zuckerberg says Meta will focus its future investments on the AI algorithm behind Reels recommendations, ads and business messaging (including in-messenger ads), and—you guessed it—the metaverse.
Following the earnings report and investor call, Meta’s stock fell by about 25%.