Meta reported a decline in revenue for the second consecutive quarter this week. The company has struggled to come out on top after investing $70 billion into the Metaverse, its immersive virtual world.
The quarter’s weak results raised fresh questions about Meta’s plans to pour more money at least $10 billion a year – into the virtual realm, as investors raise doubts about growth, the report said.
The company is also said to be falling in advertising sales as it faces competition from TikTok’s wildly popular video app.
The quarterly results from Meta Platforms Inc. sent its stock tumbling 19% in after-hours trading on Wednesday to $105.20.
If the sell-off holds through Thursday’s regular trading day, it will be the lowest it’s been since 2016. The stock closed Wednesday down 61% for the year.
The Menlo Park, California, company earned $4.4 billion, or $1.64 per share, in the three-month period that ended Sept. 30. That’s down 52% from, $9.19 billion, or $3.22 per share, in the same period a year earlier.
Meta’s Reality Labs unit, which includes its metaverse and virtual reality efforts, had an operating loss of $3.67 billion in the third quarter, compared with a loss of $2.63 billion a year earlier. Its revenue was $285 million.
Meta said it expects Reality Labs operating losses in 2023 to ‘grow significantly year-over-year.’
Revenue fell 4% to $27.71 billion from $29.01 billion, slightly higher than the $27.4 billion that analysts had predicted.
Analysts were expecting a profit of $1.90 per share, on average, according to FactSet.
The announcements come on the heels of CEO Zuckerberg embarrassingly introducing legs to metaverse avatars when they aren’t actually ready.
‘Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,’ wrote Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, earlier this week in a letter to Meta CEO Mark Zuckerberg.
‘This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes,’ Gerstner continued.
Meta and Zuckerberg also indicated there would be a further fall in sales during the current quarter, essentially confirming the decline would be a trend rather than an anomaly.
‘While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,” Zuckerberg said in a statement.
‘We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company,’ read the statement.
Meta also said it expects staffing levels to stay roughly the same as in the current quarter, a change from last year’s double-digit workforce growth. The company had about 87,000 employees as of Sept. 30, an increase of 28% year-over-year.
According to the Bloomberg Billionaires Index, Zuckerberg, 38, has a net worth of $38.1 billion.