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Soon after the earnings call on Wednesday, April 24, the META share price stumbled nearly 19% wiping out more than $200 billion in the company’s market cap.
Facebook’s parent company Meta’s move into the Metaverse is still weighing heavy on the company’s pockets as its Reality Labs unit recorded a staggering $3.85 billion in operating losses for Q1 2024. This comes as Meta Platforms Inc (NASDAQ: META) has also been facing increasing competition from giants like Apple in the virtual reality market.
During Q1, the Metaverse division reported a revenue of $440 million, up by nearly 30% from the last year. However, it represents only 1% of Meta’s total sales in the first quarter. Analysts, however, expected the operating loss at $4.31 billion with sales of $512.5 million for Q1 2024.
Since the end of 2020, the total losses reported by Reality Labs stood upwards of $45 billion, when Meta started reporting this business division separately for the first time.
Meta chief Mark Zuckerberg is quite bullish on metaverse referring to it as the “next frontier”. However, at least for now, developing this metaverse technology seems to be a costly effort. Furthermore, Meta is also flexing its muscles to combat competition for its Quest V3 headsets, coming from the Apple Vision Pro.
Earlier this week on Monday, Meta revealed its collaboration with third-party hardware firms to develop fresh VR headsets utilizing the Meta Horizon operating system, which currently drives its Quest headsets. Zuckerberg emphasized that, unlike Apple’s closed ecosystem dominance in the phone market, Meta’s initiative seeks to establish an open model as the cornerstone of the next computing era.
META Stock Price Tanks 19% after Q1 2024 Report
Soon after the earnings call on Wednesday, April 24, the share price of META stumbled nearly 19% wiping out more than $200 billion in the company’s market cap. Speaking on this, Zuckerberg said:
“I think it’s worth calling that out, that we’ve historically seen a lot of volatility in our stock during this phase of our product playbook where we’re investing in scaling a new product but aren’t yet monetizing it.”
He also referred to some of the past developments that yielded results such as transitioning to mobile, short-video service Reels, etc. While 98% of its revenue stems from digital advertising, Zuckerberg’s discussion on ads primarily focused on future prospects, exploring avenues to transform existing investments into advertising revenue.
Additionally, Zuckerberg also discussed Meta’s efforts in building the leading AI. He said:
“There are several ways to build a massive business here including scaling business messaging, introducing ads or paid content into AI interactions.”
The Meta boss also spoke about the company’s newest large language model – Meta Llama 3 – along with the recent rollout of Meta AI, which directly competes with OpenAI’s ChatGPT. Zuckerberg also spoke about Meta’s AR Glasses calling it “the ideal device for an AI assistant because you can let them see what you see and hear what you hear.”
