Meta has spent $15 billion trying to build the metaverse
Topics: Facebook, Technology, Mark Zuckerberg
Aisha Nozari
Featured Image Credit: Meta / Dmitriy Shironosov / Alamy Stock Photo
Topics: Facebook, Technology, Mark Zuckerberg
Experts are starting to get worried about just how much Meta has spent on its metaverse venture.
The company has yet to publicly share precisely what funds are being spent on, with one tech analyst describing the social network’s lack of transparency as a ‘disaster’.
As for the big number reveal, it might make you feel a little queasy to hear that since the beginning of last year, Meta has spent more than $15 billion on its Reality Labs metaverse.
Watch Mark Zuckerberg talk about the metaverse below:
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Speaking to Business Insider about Meta’s mega spending, Dan Ives, a tech analyst at Wedbush Securities, said: "The problem is that they spend the money, but the transparency with investors has been a disaster.”
Ives continued: “This continues to be a risky bet by Zuckerberg and the team because, for now, they're betting money on the future while they continue to have massive headwinds on their core business.”
Last year, Meta started disclosing financial information for Reality Labs and revealed the venture had gobbled up more than $10 billion.
For the first six months of 2022, Meta reported a loss of more than $5 billion, but some analysts reckon this year’s end loss number will ‘eclipse’ last year.
Mark Zgutowicz, an analyst at Benchmark, told the outlet that although he can’t be sure, he estimates at least 60 percent of Reality Labs’ losses are because of the huge research and development costs that have to go into building a brand new world like metaverse.
"There is no real metaverse, at least from a scalable standpoint, until we all can wear glasses that don't make us look like an alien or something," he shared.
However, Zgutowicz did tell Business Insider that it’s understandable Meta wants to build everything itself, explaining:
"It's hard for them to go out and acquire other unique software companies because they're so tied down with regulatory burdens that they have to stay within their house and build something organically.”
Zgutowicz went on: "Where the transparency could be better is how and when they expect to get a return on this spend.”
Business Insider also pointed out that Meta isn’t the only company not to have itemised losses, but that doing so is standard practice in Corporate America.
UNILAD has approached a Meta spokesperson for comment.
But no matter how dodgy things look, Tigress Financial Partners analyst Ivan Feinseth reminded readers that good ol’ Mark Zuckerberg rarely misses the mark.
"When Facebook first bought Instagram, people laughed at him and said he was crazy. They said, 'this guy is just going to throw all this money away,' and Instagram turned out to be one of the best acquisitions ever. Not [just] for Facebook – ever, in the world of acquisitions," Feinseth said.
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