Zuckerberg promises ‘a pivotal year for the metaverse’ as its Reality Labs division continues to bleed cash
Meta’s Reality Labs division continues to bleed billions of dollars — crossing $60 billion in losses since 2020.
“This is also going to be a pivotal year for the metaverse,” Meta CEO Mark Zuckerberg confidently told investors on Wednesday.
The unit, responsible for its virtual reality headset line “Quest” and its Ray-Ban smart glasses, reported a loss of $5 billion in its Q4 earnings (totaling $17.7 billion in 2024). Its revenue slightly rose 1% year over year to $1.08 billion, driven by hardware sales. Expenses jumped to $6 billion, up 5% year over year.
“The number of people using Quest and Horizon has been steadily growing, and this is a year when a number of the long-term investments that we’ve been working on that will make the metaverse more visually stunning and inspiring will really start to land,” Zuckerberg said on the earnings call.
Analysts told Yahoo Finance it’s questionable whether Zuckerberg’s metaverse will ever clock a profit.
“There are going to be other ways Meta can monetize its investment down the road but it does look very expensive — like a loss leader in the short term,” Moor Insights & Strategy analyst Anshel Sag told Yahoo Finance. “AR is a very expensive technology to develop and I believe most of the money that matters spending in Reality Labs is on AR efforts.”
A leaked memo earlier this week claimed Reality Labs has hit its sales and user targets. However, current and former employees within the division exclusively tell Yahoo Finance that hitting targets is a small piece of the puzzle.
“If their losses are going up and the sales are going up, the question they need to ask themselves is why does the hardware cost so much to make and why aren’t they working harder to bring the cost down,” said one former Reality Labs manager. “They haven’t figured out how to make this profitable and they’re not even close.”
According to market intelligence firm IDC Global, Meta continues to dominate the VR/AR market with a 70% share.
“True Augmented Reality headsets such as Meta’s Orion will take time to gain salience as these headsets require high levels of sophistication paired with battery and display tech that are yet to scale,” IDC said in its report.
Meta’s stock has been up 68% in the past year, partially due to the booming investor enthusiasm for AI. Last week, Zuckerberg announced that Meta is planning to spend $60 billion to $65 billion on its artificial intelligence strategy — including a data center “so large it would cover a significant part of Manhattan.”
