Mark Zuckerberg's metaverse just keeps losing money, as Meta's Reality Labs division posts a loss of $13.7 billion for the year
Reality Labs is the business and research unit of Meta that focuses on the metaverse.
It reported a loss of $4.28 billion for the fourth quarter, wider than $3.3 billion in the quarter prior.
The division lost $13.7 billion in 2022.
Reality Labs — the division of Meta that's trying to bring the metaverse to fruition — is shaking out to be a bigger money pit than expected.
The company posted its fourth-quarter earnings report on Wednesday, with Reality Labs showing an operating loss of $4.28 billion for the fourth quarter, wider than $3.3 billion in the previous quarter.
Still, the number is slightly narrower than analysts' expectations of a loss of around $4.36 billion for the quarter, according to CNBC's reference of StreetAccount. That figure, combined with Meta's strength in its user base and planned cost-cutting, helped the stock jump nearly 19% in after-hours trading.
In the past 12 months, Reality Labs has sucked up more than $13.7 billion.
In terms of revenue, Reality Labs generated $727 million for the fourth quarter, which was slightly higher than analyst's expectations of $715.1 million, according to CNBC's reference of StreetAccount.
Over the past several months, investors have railed against Meta's decision to continue funneling money into the metaverse. One investor even wrote an open letter to Meta in October titled "Time to Get Fit" where he advised Meta to limit its metaverse spending.
Still, the company has been externally defensive of its pursuit of a sweeping new virtual world.
In a Q&A session on Wednesday after its earnings results were released, CEO Mark Zuckerberg said, "None of the signals that I've seen so far suggest that we should shift the Reality Labs strategy long-term. We are constantly adjusting the specifics of how we execute this."
Toward the end of the session, one listener asked whether "accelerating losses" at Reality Labs should be expected in 2023 — and if that dovetailed with an expectation of "peak" operating losses this year.
Susan Li, Meta's chief financial officer, responded, "We still expect our full year Reality Labs losses to increase in 2023 and we're going to continue to invest meaningfully in this area given the significant long term opportunities that we see."
In December, the company's chief technology officer Andrew Bosworth wrote a blog post titled, "Why we still believe in the future," where he articulated that Meta would continue investing 20% of its spending in Reality Labs.
However, in an internal email sent in late December, Bosworth reportedly told the 18,000 members of Reality Labs that the company has solved too many problems simply "by adding headcount."
At the same time, Meta's stock shot up 19% after hours since the results were posted, suggesting that many investors are disregarding losses in a division that amounts to a little over 2% of the company's revenue.
Meta did not immediately respond to Insider's request for a comment.
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