The CEO of Meta reiterates his commitment to spending billions of dollars on the metaverse, despite investor concerns about the health of his company's online advertising business.
On a call with analysts as part of Meta's third-quarter earnings report, Zuckerberg and other Meta executives answered questions from analysts who were increasingly frustrated with the company's rising costs and expenses.
The company reported weak fourth-quarter guidance that caused its shares to tank. The revenue and profits of the Facebook parent fell in the third quarter.
Meta's Reality Labs unit, which is responsible for developing the virtual reality and related augmented reality technology that underpins the yet-to-be built metaverse, has lost $9.4 billion in the last four years. Dave Wehner, chief financial officer of Meta, said that revenue in that business unit was down by 50%.
Reality Labs' operating losses are expected to grow significantly in the years to come. We expect to pace Reality Labs investments such that we can achieve our goal of growing operating income in the long run.
During the earnings call, an analyst at Jeffries said that investors are likely to feel that there are too many experimental bets versus proven bets and asked why Meta thinks the metaverse will pay off.
There is a difference between being experimental and not knowing how good it will be, according to Facebook founder and CEO Mark Zuckerberg. A lot of the things that we are working on, we are quite confident that they will work and be good.
Each improvement is going in the right direction, even though they don't know how big they are.
"Obviously, the metaverse is a longer term set of efforts that we're working on, and I think that that will end up working as well."
There are a lot of things going on right now in the business and in the world, and so it's hard to have a simple "we're going to do this one thing and that's gonna solve all the issues"
The poor economy, Apple's privacy update, and competition from players like TikTok are some of the challenges Meta is facing.
He said that long-term investments into the metaverse would provide greater returns.
"I think we're going to resolve each of these things over different periods of time and I appreciate the patience and I think that those who are patient and invest with us will end up being rewarded."
The reason that his company is developing the metaverse is to make sure that it owns a platform in the future that won't be impacted by Apple's decisions. The metaverse is being developed because technology companies can be more innovative when they build both the software and hardware that underpins a computing platform.
It's possible to build new and innovative things if you control more of the stack yourself.
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