In September 2021, when Facebook rebranded itself as Meta, it was a bold declaration of CEO Mark Zuckerberg’s dedication to transitioning from a Web2 social media platform to a metaverse-focused company.
Fast forward three years, as Meta prepares for its first-quarter earnings call on April 24, the financial dedication and impact of its foray into virtual and augmented reality (VR and AR) technologies on the company’s finances are worth examining.
In 2023, Meta reported a revenue of $134.9 billion, marking a near 16% increase from 2022.
The fourth quarter alone saw a record-breaking revenue of $40.1 billion, surpassing analyst predictions.
This suggests that Meta’s metaverse pivot is bearing fruit.
However, the financial performance presents a complex picture as the earnings call approaches.
Despite the success of the Facebook app, Meta’s Reality Labs — the division behind the Quest VR headset series — has faced significant financial challenges, accumulating operating losses of about $40 billion since 2021.
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The company’s revenue streams are primarily derived from its social media and messaging applications, including Facebook, Instagram, Messenger, and WhatsApp.
According to UploadVR, Meta has sold around 20 million Quest headsets since 2019, a figure dwarfed by Apple’s 151 million iPhones sold in 2023 and Sony’s 50 million PlayStation 5 consoles sold since 2020.
Investors and shareholders appear unfazed by the struggles of Reality Labs.
As highlighted by The Motley Fool, alongside its substantial investments in the metaverse through Reality Labs, Meta has aggressively bought back its stock.
The company has reacquired $92 billion of its shares since 2021, with a $31 billion reserve for further purchases by the end of 2023 and an additional $50 billion allocated for buybacks in February.
This strategy indicates Meta’s confidence in its long-term vision for the metaverse, even as it navigates the financial challenges of pioneering in VR and AR technologies.
As the company gears up for its upcoming earnings call, the industry and investors alike will be keen to see how these investments play out in the broader context of Meta’s financial health and strategic direction.
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