Despite a rocky period last year, Meta, previously known as Facebook, has reported an 11% revenue increase year-over-year, a refreshing change after their first-ever recorded quarterly revenue drop last year. The rebound is reflected in Meta’s stock price which plummeted throughout 2022, but is now steadily recovering, closing at around $298 per share today.
One of the primary reasons for Meta’s increased profits is the reduction in staff by over 20,000, resulting in significantly decreased personnel expenses. The company has dubbed this mass dismissal “The Year of Efficiency”, a phrase much easier for investors to digest than the blunt term “mass layoffs”.
Yet, the revenue boost isn’t solely due to cost-cutting. According to Zuckerberg, the company’s platform Reels has seen a surge to 200 billion daily plays across Instagram and Facebook, with its monetization revenue skyrocketing from $3 billion last fall to over $10 billion. Additionally, Threads, Meta’s latest rival to Twitter, has had a promising start, although monetization efforts haven’t begun.
However, Meta’s Reality Labs, the division responsible for VR and AR products, is experiencing difficulties. Despite bringing in $276 million in revenue, the division lost a staggering $3.7 billion this quarter and a total of $13.7 billion throughout 2022.
The Q2 2023 earnings report from Meta’s CFO, Susan Li, indicates that Reality Labs’ operating losses are expected to worsen. With the public showing lukewarm interest in Meta’s metaverse vision and Apple’s entry into the AR/VR market with its $3,499 Vision Pro AR headset, Meta is facing tough competition. Nevertheless, Meta plans to launch its $499 Quest 3 mixed reality headset in the fall, a price more attainable for the average consumer than Apple’s offering.
Despite the monumental costs of Reality Labs, Zuckerberg retains his optimism, though investors remain doubtful about the payoff of these investments.
“We aim to build great experiences that facilitate connection,” he stated. “I believe our involvement in shaping the next platform will profoundly influence this for the upcoming decades.”
Zuckerberg’s optimism mirrors his outlook from last year, where he expressed excitement for the 2030s, despite Reality Labs’ financial challenges.
“Although I can’t guarantee my predictions will hold true, I believe this is the future direction of the world,” Zuckerberg said.
