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Reality Labs’ $4B Loss Contributes to Meta’s Ongoing Metaverse-Related Struggles

2 mins
Updated by Kyle Baird
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In Brief

  • Meta’s Reality Labs division lost $4 billion in Q1 2023.
  • In 2022, the company’s metaverse unit recorded an operating loss of over $13.7 billion.
  • While still interested in the metaverse, Meta has recently doubled down on AI.
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Meta’s Reality Labs recorded a loss of $4 billion in the first quarter of 2023. The loss follows an annual loss of over $13 billion in 2022.

Meta’s Reality Labs division, which focused on metaverse products and experiences, has created a $4 billion loss for the company. The company published its quarterly results for Q1 2023, with the $4 billion loss adding to the already substantial losses from last year.

Metaverse Ambitions Scaled Back

Meta appears to be still committed to the Metaverse, though its ambitions have been scaled back. The company has carried out several cost-cutting measures, including multiple rounds of layoffs. CEO Mark Zuckerberg had previously described 2023 as a year of efficiency, but all eyes on are whether the company can sustain itself well enough and grow.

Meta's metaverse unit, Reality Labs,  recorded $4M loss in Q1. The company is now focused on AI products like ChatGPT: Meta
Reality Labs Recorded $4M Loss in Q1: Meta

The total revenue generated from the company’s metaverse was $339 million, which pales in comparison to other revenue streams. The company also runs its own line of VR hardware, but these don’t appear to be doing enough for it.

Ad revenue remains king for Meta, but Zuckerberg is keen on becoming a different company, so to speak. Investors aren’t quite as sure — Meta’s stock value has picked up over the past few weeks but tanked in 2022.

Reality Labs Lost Over $13B in 2022

2022 was a hard year for Meta, with the company recording a whopping operating loss of $13.72 billion with respect to the metaverse. Meta was bold in its ambition last year, but the results aren’t there to show so far.

More specifically, Meta recorded the following quarterly losses in 2022: $3 billion, $2.8 billion, $3.7 billion, and $4.3 billion. The stock valuation dropped consistently throughout 2022, and Meta’s cost-cutting measures are a sign that it has been hard by those metaverse losses.

The losses have not stopped Zuckerberg from finding optimism. He doubled down on the focus on AI,

“We had a good quarter and our community continues to grow. Our AI work is driving good results across our apps and business. We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision.”

Meta Finds New Love in AI

Unsurprisingly, like the entire tech industry, Meta has turned its attention to AI. The ChatGPT revolution has shaken up the tech sector, and several companies are racing towards creating a rival that can truly compete with OpenAI’s solution.

Zuckerberg recently elaborated on Meta’s ambitions in the space, saying that Meta wanted to “introduce AI agents to billions of people.” The CEO made the comments to investors, though there were few specifics in terms of the plan.

However, in February, Meta established a new team focusing on creating AI solutions for popular products, Instagram and WhatsApp. It’s the next pivot for Meta, but time will tell if anything comes of it.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...
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