Meta’s revenue decline for the second quarter in a row disappointed shareholders, criticism about heavy metaverse investments grows
On Oct.26, Meta Platforms reported financial results for the quarter that ended September 30, 2022. While the Q2 decline might have been a surprise, another revenue slump shows a downward tendency. Yet the management asks investors to be patient and have faith in the company’s growth vision.
In Q3 2022, Meta’s revenue declined 4% year over year to land at the $27.7 billion mark. Moreover, net income slid to $4.395 billion, down from $9.194 billion YoY.
Investors criticize heavy metaverse investment
Although Meta CFO David Wehner pointed out that the decline is partly owed to inflation, some shareholders blame Meta for its huge investment in the metaverse. Just a few days ago, Altimeter Capital Chair and CEO Brad Gerstner published an open letter stating that Meta needs to re-build confidence with investors, employees and the tech community by reducing the “super-sized” funding of the project which may take 10 years to yield results.
The criticism is not baseless: Reality Labs, Meta’s virtual reality division, lost $3.672 billion during Q3. Back in Q2, the losses equalled around $3 billion as well. Overall, Meta’s expensive initiative registered the eighth straight quarter of losses.
However, Meta’s CEO Mark Zuckerberg acknowledged the division would remain loss-bearing for a while. He added that the Reality Labs teams are making good progress, and reiterated his firm belief that VR and AR will be dominant technologies in the future. Once again, Zuckerberg encouraged investors to be patient and see how it pays off in the 2030s.
The company expects the fourth quarter of 2022 total revenue to grow to the range of $30-32.5 billion.