Meta's Metaverse Gamble Keeps Bleeding Cash as Losses Surge to $68.8 Billion

February 10, 1:03 am

Facebook's parent company, Meta (META), ended 2024 on a high note. The tech giant's net income skyrocketed by 86.8% to $55.5 billion, the biggest increase in the GAFAM group, proving that aggressive investments in AI-driven ad technologies and a rebound in digital ad spending paid off. But while its core business soared, Meta's metaverse division continued mounting losses at an alarming rate.

According to data presented by AltIndex.com, the cumulative operating losses of Meta's Reality Lab ballooned to a staggering $68.8 billion last year.

Reality Lab's Annual Losses Have Nearly Quadrupled in Six Years

Back in 2019, Facebook's founder and CEO, Mark Zuckerberg, rebranded the company as Meta, envisioning the metaverse as the future of digital interaction. However, that vision has come with an eye-watering price tag, costing Meta and its shareholders tens of billions of dollars. Even more worrying is that the annual operating losses of its Reality Labs unit, home to metaverse-related technologies, have nearly quadrupled in six years.

The division is losing billions as research, hardware production, and operating costs outweigh the slow adoption of metaverse technology. Furthermore, consumer demand for VR remains niche, while competition from AI and other emerging tech has drawn investors and users.

According to Statista and the company's official data, in 2019, Reality Labs recorded a $4.5 billion operating loss. That figure surged by 46% to $6.6 billion the following year. But 2021 saw an even bigger increase, with the operating loss growing by 54% year-over-year and hitting a staggering $10.2 billion. Meta's metaverse bet has continued bleeding money ever since, with losses reaching $13.7 billion in 2022 and $16.1 billion in 2023.

Although Meta's profit skyrocketed in 2024, its metaverse division set a new record for financial setbacks. During the twelve months of the year, the Reality Labs unit reported an annual operating loss of $17.7 billion, marking a 10% increase in a year and bringing its six-year cumulative loss to a jaw-dropping $68.8 billion.

Investors Stay Loyal to Meta Despite Reality Labs' Mounting Losses

Investors remain bullish on Meta's long-term vision even with nearly $70 billion sunk into its metaverse bet, enough to acquire streaming giants like Netflix and Spotify. As long as its core business, advertising on Facebook, Instagram, and WhatsApp, continues delivering massive profits, confidence in Mark Zuckerberg's long-term metaverse vision remains high. The company's stock price reflects that optimism.

Meta's stock soared 51% over the past year, hitting $712 last week. AltIndex's AI score of 61 reflects the company's strong momentum, marking Meta as a buy. Investor sentiment is also overwhelmingly positive. Last week, Meta scored a sentiment score of 81 out of 100 on top investing forums, outperforming most of its industry peers.

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