Meta's Reality Labs Has Lost More Than $21 Billion Since the Start of 2022 (cnbc.com) 64
schwit1 shares a report from CNBC: Meta reported second-quarter earnings on Wednesday and said that its Reality Labs unit, which develops virtual reality and augmented reality technologies needed to power the metaverse, logged a $3.7 billion operating loss. Last year, Meta's Reality Labs unit lost a total of $13.7 billion while bringing in $2.16 billion in revenue, which is driven in part by the company's sales of Quest-branded VR headsets. Reality Labs lost $3.99 billion during the first quarter. That puts its total losses at about $21.3 billion since the beginning of last year.
Meta said in its earnings report that it expects operating losses in its Reality Labs unit "to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem." Despite Reality Labs' operating loss, Meta reported revenue of $32 billion for its quarter ending in June, an 11% increase compared to the same period last year. "The company reported profits of $7.79 billion for the quarter, a 16% increase compared to last year, also beating analysts' estimates," adds CNN.
Meta said in its earnings report that it expects operating losses in its Reality Labs unit "to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem." Despite Reality Labs' operating loss, Meta reported revenue of $32 billion for its quarter ending in June, an 11% increase compared to the same period last year. "The company reported profits of $7.79 billion for the quarter, a 16% increase compared to last year, also beating analysts' estimates," adds CNN.
HOW (Score:5, Insightful)
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[money laundering]
The Global Boiling is Here (Score:2, Funny)
I know the metaverse sounds real stupid right now, but wait a few years. When going outside means literally facing boiling temperatures, nobody is going to care about doing anything in the real world anymore. Downloading your soul into the metaverse (via a Musk neuralink) and then putting your physical body on ice will be the only way people can get past the global boiling era.
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I know the metaverse sounds real stupid right now, but wait a few years.
Will it sound even more stupid then?
Re: The Global Boiling is Here (Score:1)
Re:HOW (Score:4, Interesting)
Honestly, if you see that the Metaverse isn't working, how do you keep bleeding this much money? That's $30 million dollars PER DAY, pissed down the drain. What are they even spending it on?
I know big numbers sound scary, but right now this is virtually the only investment Facebook is making in any kind of R&D, and compared to R&D spending as a portion of either revenue or profit, ... it's actually low compared to other tech companies.
Now while I don't think it will amount to anything because I think they are incompetent, their expense number isn't only really scary for those people who haven't looked into what tech companies spend normally and it would be scary if they spent it on borrowed money rather than just reinvesting profit. The scary thing is, at the current trajectory there's really nothing stopping them from blowing money on the metaverse in perpetuity.
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Honestly, if you see that the Metaverse isn't working, how do you keep bleeding this much money? That's $30 million dollars PER DAY, pissed down the drain. What are they even spending it on?
I know big numbers sound scary, but right now this is virtually the only investment Facebook is making in any kind of R&D, and compared to R&D spending as a portion of either revenue or profit, ... it's actually low compared to other tech companies.
Now while I don't think it will amount to anything because I think they are incompetent, their expense number isn't only really scary for those people who haven't looked into what tech companies spend normally and it would be scary if they spent it on borrowed money rather than just reinvesting profit. The scary thing is, at the current trajectory there's really nothing stopping them from blowing money on the metaverse in perpetuity.
21 billion here, 21 billion there. After a few years it adds up to real money.
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21 billion here, 21 billion there. After a few years it adds up to real money.
Again, 21 billion is not real money when every year you're making unreal levels of revenue. This would be a problem if they were borrowing money, or spending VC funding. They aren't. They are just reinvesting profits, and Facebook's profit reinvestment ratio is lower than many of its peers. ... Who admittedly produce something of value with their reinvestment, but again don't freak out about scary sounding numbers.
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Are you Zuck or something?
21 billion is real money where there's nothing to show for it.
Re: HOW (Score:1)
Re:HOW (Score:5, Informative)
Honestly, if you see that the Metaverse isn't working, how do you keep bleeding this much money? That's $30 million dollars PER DAY, pissed down the drain. What are they even spending it on?
I know big numbers sound scary, but right now this is virtually the only investment Facebook is making in any kind of R&D, and compared to R&D spending as a portion of either revenue or profit, ... it's actually low compared to other tech companies.
Now while I don't think it will amount to anything because I think they are incompetent, their expense number isn't only really scary for those people who haven't looked into what tech companies spend normally and it would be scary if they spent it on borrowed money rather than just reinvesting profit. The scary thing is, at the current trajectory there's really nothing stopping them from blowing money on the metaverse in perpetuity.
If I'm a Meta shareholder I actually don't mind the investment.
It's a ton of cash, but they can afford it. And even if they don't crack VR as a useful product they're well positioned to follow whomever does (not to mention the patent portfolio they must be amassing if they're inclined to play dirty).
The stupid thing is the name change.
It wasn't a bad idea to ditch the Facebook name for the main company since the brand wasn't great and it muddies the fact that they've acquired a few more companies.
The bad idea was naming the new company after your unproven R&D project. Not only did they make it super difficult to cancel, but if they do cancel it they need to rename again or deal with the fact their company is named after a failed R&D project.
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if they're inclined to play dirty
...if..?
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I'm a shareholder through broad market index funds and I'd rather they returned it as dividends instead of lighting it on fire.
Ok, then what's the company's future then?
FB is the massive portion of their revenue, either through ads on the site itself or ad-tracking on 3rd party sites.
If something turns FB into a ghost town that portion of your investment is going to zero.
The safe bet for your money is they try to leverage what they have into another money maker.
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Ok, then what's the company's future then?
Not a shittier version of VRChat, that's for sure.
Re: HOW (Score:1)
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I'd be fine with them trying to find something new but anyone reasonably familiar with technology immediately knew that Facebook's meta rebranding and strategy was completely nonsense. (I say this as someone has a VR headset before this)
This was a red herring strategy to distract people from bigger issues with the FB model.
Re: HOW (Score:1)
After selling META yesterday after >70% gain, I disagree with your burning cash comment.
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I'm a shareholder through broad market index funds and I'd rather they returned it as dividends instead of lighting it on fire.
No. If you're a shareholder through broad market index funds you'll have chosen a fund with a specific risk-reward portfolio. You sound like your risk tolerance is low and as such your fund should not be investing in technology firms at all and instead focus on blue-chip production companies which offer dividends instead of promise of increasing value.
For you only two things matter: Did you choose the right fund? Is your fund competent? That's it. You through an index fund should not in the slightest concer
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You sound like your risk tolerance is low and as such your fund should not be investing in technology firms at all and instead focus on blue-chip production companies which offer dividends instead of promise of increasing value.
My risk tolerance is high but being very familiar with technology I see no reason to believe in the VR strategy that has been pursued in by Meta.
Re:HOW (Score:4, Insightful)
Honestly, if you see that the Metaverse isn't working, how do you keep bleeding this much money? That's $30 million dollars PER DAY, pissed down the drain. What are they even spending it on?
I know big numbers sound scary, but right now this is virtually the only investment Facebook is making in any kind of R&D, and compared to R&D spending as a portion of either revenue or profit, ... it's actually low compared to other tech companies.
It's not obvious which is the better strategy. Meta spends gobs of money to pursue a dream that doesn't look likely right now. Meanwhile, Apple hoards gobs of money for a future opportunity that doesn't look likely right now. Both are earning gobs of money right now.
Spending money on the Metaverse is a huge gamble. However, the right time to spend money on that gamble is way before everyone else realizes that it's an obvious thing to do. And Meta gets to spend/waste $15 billion a year out of around $45 billion in profit. Note that Apple spends about the same $15 billion per year on paying dividends. Those dividends ostensibly attract value-driven stockholders, and yet AAPL is up 23% over the last 12 months compared to 83% for META. Looking at those numbers, while META may be pursuing a fool's dream, it's not at all obvious that they're making the wrong gamble.
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Spending money on the Metaverse is a huge gamble. However, the right time to spend money on that gamble is way before everyone else realizes that it's an obvious thing to do.
Facebook has had a VR division long before any other tech company thought it was cool, they were spending R&D dollars (though not as much as they are now) before there were even rumours of Apple taking an interest. That is the reason why they are going to release their 5th generation VR headset (well 4th, the 1st gen came out before Facebook bought the company which made it) while much of the competition (classical tech companies dabbling in VR, not VR specific companies) are releasing their 1st.
But rea
Re:HOW (Score:5, Funny)
When you're trying to out-dumb Elon, you've gotta think big.
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When you're trying to out-dumb Elon, you've gotta think big.
Bravo, anon. You make me wish I had mod points.
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Re:HOW (Score:5, Informative)
he gave them the $6B
You're lying again.
"Them", emphasized above, refers to ... Elon Musk. He "donated" the 5.7 Billion in Tesla shares to his went to his own foundation! [philanthro...digest.org]
What a joke.
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The planet is overpopulated. Why add to the problem?
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Honestly, if you see that the Metaverse isn't working, how do you keep bleeding this much money? That's $30 million dollars PER DAY, pissed down the drain. What are they even spending it on?
That's exactly the first question I had - how a software company can spend $30mln daily on a project - looks like creative accounting [wikipedia.org] to me.
Re: HOW (Score:1)
Innovation is expensive. I donâ(TM)t agree 100% with Zuck on this, but it is expensive and risky.
Re: HOW (Score:2)
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He should rename it (Score:2)
...to Y.
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Because people are asking why Zuck is so damned stubborn.
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Coulda bought half an X for that (Score:3)
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Twit X
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Which half of X? the / half or the \ half? :)
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Probably the < half if it wasn't the v half.
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Zuckerberg and Musk are certainly competitive, even if the race is to see who goes broke first
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Zuckerberg and Musk are certainly competitive, even if the race is to see who goes broke first
Musk bought a company with his wealth and by scamming investors (sold some of his Tesla stake and got external investors for the Twitter purchase).
Zuckerberg has spent zero personal wealth on the Metaverse and funded investments 100% from internal profits that far exceed his current expenses.
Zuckerberg is not the one going broke here.
It's an "investment" (Score:3)
It's normal, as investments can be big expenditures up front in the hopes of big profits later. You know, like cold-fusion, Zune, bitcoin, Enron, Yahoo, Frontier Airlines, Apple III, Pets.com, etc.
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Meta is just a company run by ...
too slow, invest more (Score:3)
Meta should be investing 4x the current amount to really accelerate progress (or demise).
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I'm sure there are downsides to being a one-hit-wonder.
Somehow I suspect.. (Score:4, Insightful)
.. that the money wasn't spent wisely and effectively
It will be interesting to see if the true facts ever come out
I suspect that a LOT of it went to waste, stupidity, fraud, embezzlement and a whole lot of other stuff unrelated to research
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.. Somehow I suspect that the money wasn't spent wisely and effectively.
Yes. How could that gargantuan amount of money be spent with nothing much to show for it unless that statement is true?
I suspect that a LOT of it went to waste, stupidity, fraud, embezzlement and a whole lot of other stuff unrelated to research
We live in a cynical world, rightly so, so it is understandable that you would put fraud and embezzlement on that list. And, perhaps that is true. But, there is a saying, "Never attribute to malice that which is adequately explained by stupidity." If the company has the hubris and narcissistic arrogance to spend money on vaguely conceived projects without enough adult supervision and en
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.. that the money wasn't spent wisely and effectively
There's nothing to suspect. The very people working on the Metaverse division have flat out said that the spend is senseless throwing shit at walls to see what sticks. Horizon Worlds has had more expense than many AAA studios through into their games, and has almost nothing to show for it.
The Quest Pro has flopped to the point of being discounted 50% and the successor scrapped (though admittedly not all the R&D that went into this is wasted).
fraud, embezzlement
No. People don't seem to understand how how much waste can ac
Don't listen to the naysayers, Jeff (Score:2)
Keep on dumping money into that hole as fast as possible! Increase the rate of spending if possible!
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Sorry, I was channeling the late Jesse Helms and, well, Zuckerberg looked a bit dark to me...
When you’re that wealthy (Score:4, Interesting)
The hobbies of rich people. As much as people sneer about it, there are worse ways for an unimaginably wealthy person to spend their money. George Vanderbilt spent the GDP of a medium-sized country on a single house. The Koch brothers spent a big chunk of their fortune basically playing Darth Vader. I have no idea what Theil is gonna do with his fortune but you can be guaranteed that it won’t benefit humanity in any way shape or form.
Absolutely nothing is made worse by twitter imploding, and trying to develop VR isn’t a bad thing. Musk and Zuck’s pastimes are basically harmless.
That's what makes Meta so great (Score:2)
That's an unreal amount of failed investment (Score:2)
Silicon valley accounting? (Score:4, Interesting)
Feels like it was a accounting trick or something of that nature.
There is no way it makes sense.
AAA video game (like god of war) costs 200 million to make. They could have made over 100 of those. Or if they spend 500k on each employee (top engineer salary), they could have about 50K employees working on this.
Unless there is a breakdown of the expenses, I'm thinking there is a lot of things not directly related to metaverse and just for taxes and accounting.
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Feels like it was a accounting trick or something of that nature.
It's not all being spent on R&D - the division manufactures, markets and supports a product. Apparently there have been around 20 million Quest sales to date.
My guess is they are making a loss on the hardware itself, have substantial warranty/return/support claims, and are spending huge amounts on marketing the things (probably spent on Facebook/Instagram ads though, so yes, this might be a bit of an accounting trick).
Also when you have 20 million of anything out in the wild, you can quite easily end up
Fake News (Score:2)
Don't worry, it's not real money. Move along.
Inequitable Voting Shares (Score:2)