Remember the metaverse? It was that new thing that Mark Zuckerberg has been evangelizing for years, even saying at Meta Connect this year that it will be the next frontier of social interactions. “Pretty soon, I think we’re going to be at a point where you’re going to be there physically with some of your friends, and others will be there digitally as avatars or holograms, and they’ll feel just as present as everyone else,” he said in September at the company’s annual showcase event. But it has lost money so far—a lot.

The progress toward making the metaverse a reality hasn’t been without growing pains, to say the least. Meta’s Reality Labs division, which houses its efforts to break into the metaverse, has lost around $46.5 billion since 2019, the company revealed in its latest earnings report.

The losses over that time are big enough to be a Fortune 100 company. That $46.5 billion figure is more than the entire revenue for Best Buy, which ranks 94 on the Fortune 100. Meta has lost more money investing in the metaverse than the total revenue for mammoth companies like pharmaceutical giant Bristol-Myers Squibb and United Airlines. 

That hasn’t hurt Mark Zuckerberg’s net worth, though. With much of his fortune tied to Meta stock, his net worth has shot up 130% year to date as the stock has gained 136.8% this year. His net worth has risen $59 billion since the start of the year to $105 billion, making him the world’s 10th-richest person.

Billions spent pursuing ‘the future of online interactions’

Despite the big losses to date, Zuckerberg didn’t seem any less committed to the metaverse. “One of the most interesting questions for our industry over the coming decades is how we bring together our physical and digital worlds into a coherent and good experience,” he said on Meta’s third-quarter earnings call. 

However, it doesn’t seem like the negative operating income has necessarily caught Meta or Zuckerberg off guard. The company has repeatedly stated the division aims to develop long-term innovations that can then be integrated into its other more ubiquitous products like Facebook, Instagram, and WhatsApp, which the company calls its “family of apps.” “Reality Labs is working to build the future of online interactions,” Meta chief financial officer Susan Li said on an earnings call this week. 

Even though the Reality Labs division has been unprofitable, Meta’s overall business remains in the black. The company had $95 billion in revenue through the third quarter of this year and $30 billion in profits. Almost all—99%—of Meta’s revenue comes from the company’s family of apps. Meta beat analyst projections across the board on its latest earnings call, outperforming expectations for revenue, earnings per share, and daily and monthly active users. 

Meta’s stock fell 6.3% from $308.15 to $288.64 per share in after-hours trading on Wednesday, after it reported earnings, and it’s down roughly 4.6% since Monday. But analysts attributed that mostly to uncertainty regarding online advertising spend for the remainder of the year due to the escalating conflict in the Middle East. 

More losses seen ahead for Reality Labs

Li also informed investors on the call that Meta expected operating losses for Reality Labs to be higher at the end of this year compared to 2022. The losses were primarily driven by what she termed “direct costs,” meaning costs that can be attributed to the production of a specific product, stemming from the headcount, operating expenses, and raw materials and labor that go into making the division’s VR headsets. 

This year, Meta released two new products from Reality Labs: Quest 3, a new VR headset; and Ray Ban–branded smart glasses. (Meta doesn’t release sales numbers for its Quest 3 headsets.) Both of which, at least for now, the company seems convinced will play a major role in the future of its social media apps. “As glasses scale, they’ll make it increasingly easy to capture compelling content from a first-person point of view while you’re staying in the moment or the activity that you’re doing, and sharing that content should enrich our content ecosystems even further,” Li said.

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