How Mark Zuckerberg pumped $36 BILLION into his failing Metaverse - and lost $30 billion of it

Mark Zuckerberg has funneled more than $36billion into his failing Metaverse venture since 2019, new earnings reports show – and the CEO has subsequently seen more than $30 billion of those funds evaporate in a matter of months.

The troubling statistics come on the heels of a disappointing earnings report from the social media giant, which has seen its usership wane in recent years.

Zuckerberg, 38, who famously founded the company’s crowning jewel Facebook as an undergrad at Harvard in 2004, was worth $126 billion at the close of 2021.

As of this weekend, he was worth a mere $38 billion.

The quarter’s weak results raised fresh questions about the New York-born billionaire’s rapid investing into his virtual reality project, which has been mocked for its never-ending empty rooms and failure to attract users.

Financial statements show that the exec has largely bet his company’s future on the flailing technology, sinking tens of billions of company funds in hopes it would spur interest from users who have been drawn to other platforms such as TikTok.

Consequently, Reality Labs, the division that houses metaverse and Facebook’s resident VR units, has racked up billions of dollars in debt as the venture has for the most part fallen flat, leading to losses that are crushing the company’s profits.

Meta began publishing financial data for Reality Labs in the fourth quarter of 2021 – the same quarter the company reported its first-ever drop in users.

Zuckerberg, 38, who famously founded the company’s crowning jewel Facebook as an undergrad at Harvard in 2004, was worth $126 billion at the close of 2021. As of this weekend, he was worth a mere $38 billion

The losses have been largely fueled by out-of-control investing by the New York billionair into Meta’s Reality Labs unit, which includes its metaverse and virtual reality efforts

According to the damning financial statements, Reality Labs reported $5.3 billion in revenue for the year after cumulative operating an loss of $30.7 billion since funding for the Metaverse began in earnest in 2019.

The company’s third-quarter earnings report Wednesday further showed that Reality Labs had accumulated an operating loss of $9.4billion over the first nine months of 2022 alone – with top executives expecting the losses to mount even more as the project shows no signs of slowing despite being met with little to no success.

‘We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,’ CFO David Wehner said after the results’ highly anticipated release.

Zuckerberg, meanwhile, blamed the losses on the recent launch of the company’s new Quest VR headset and the impact of the first full-year salaries for staff hired in 2022 – calling them the ‘biggest drivers’ for the concerning results.

Costs and expenses for the Reality Labs faction of the company, the statements reveal, amounted to $12.5 billion for the year of 2021 – with the division only raking in $2.3billion revenue within that same span.

Furthermore, investments for this year are also on track to exceed 2021, the data strongly suggests – with labs costs and expenses swelling to $10.8 billion within the initial months of 2022, a span that has seen the division report only $1.4billion in revenue.

Meta attributed the lower sales to its rollout of the Quest 2 VR headset earlier this month – losses the company expects to recuperate in the coming months.

Wednesday’s earnings report also showed that Meta’s third-quarter operating margin had fallen drastically this year amid the company’s now widely known spending spree, falling from from 36 percent in 2021 to just 20 percent this year.

Those dwindling profits, factored before figuring in the expenses of taxes and interest, came as Zuckerberg rebranded Facebook as Meta at the close of 2021, to reflect his company’s push into the ‘Metaverse.’

The company, long the kingpin of the social media sphere with nearly 3billion monthly active users, has since struggled with the rebrand – but expects Reality Labs operating losses in 2023 to ‘grow significantly year-over-year.’

Zuckerberg has subsequently been forced to bear the brunt of the tech’s supposed slow start, losing more than $88 billion in just a matter of months.

What’s more, Meta reported its first-ever year-on-year revenue decline in the fourth quarter of 2021 – a trend that has since persisted this year.

Meta’s stock price, moreover, has plummeted an astounding 70.5 percent year-to-date, to less than $100 – a marker not seen since early 2016.

Revenue for this year fell 4% to $27.71 billion from $29.01 billion, slightly higher than the $27.4 billion that analysts had predicted.

Analysts were expecting a profit of $1.90 per share, on average, according to FactSet.

In February, Meta suffered another setback when it revealed no growth in monthly Facebook users, triggering a historic collapse in its stock price and slashing Zuckerberg’s fortune by US$31 billion – one of the biggest one-day wealth declines in history.

Zuckerberg’s fortune has fallen by more than any other billionaire tracked by Bloomberg

Meta’s value is down by over 56 percent this year

The tech industry as a whole, meanwhile, is facing a host of challenges, as advertisers reassess their spending amid looming recession, and brainstorm ways to innovate a technological sphere that has grown somewhat stagnant in recent years.

Meta is performing worse than its peers, Bloomberg reported – down 57 percent this year, versus 14 percent for Apple, 26 percent for Amazon and 29 percent for Google’s parent company Alphabet.

Almost all of Zuckerberg’s wealth is tied up in Meta stock, with the CEO holing more than 350 million shares, according to the company’s latest proxy statement.

With that said, many of the company’s investors are have reportedly grown concerned with the CEO, labeling the Metaverse spending as overly extravagant, on a concept that many still view as confusing and for the most part incomplete.

‘Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,’ wrote Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, earlier this week in a letter to Meta CEO Mark Zuckerberg.

‘This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes,’ Gerstner continued.

Meta and Zuckerberg also indicated there would be a further fall in sales during the current quarter, essentially confirming the decline would be a trend rather than an anomaly.

‘While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,” Zuckerberg said in a statement.

‘We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company,’ read the statement.

Meta also said it expects staffing levels to stay roughly the same as in the current quarter, a change from last year’s double-digit workforce growth.

The company had about 87,000 employees as of Sept. 30, an increase of 28% year-over-year.

Meta said it expects Reality Labs operating losses in 2023 to ‘grow significantly year-over-year,’

A bright spot: 3.71 billion people logged in to at least one of Meta’s family of apps — Facebook, Instagram, WhatsApp or Messenger — up 4% year-over-year

THE FACEBOOK ‘METAVERSE’: A VIRTUAL WORLD WITHIN A WORLD

In a recent interview, Mark Zuckerberg said that over the next five years, he wants people to think of Facebook not as a social media company, but a ‘metaverse’ company.

That is one that is akin to a virtual environment where people can work and play for most of their 24 hours without leaving their home.

‘And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company,’ Zuckerberg said in the interview with The Verge.

‘And obviously, all of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators.

‘But this is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.’

So what exactly is the metaverse?

As Zuckerberg describes it, it’s a ‘vision’ that spans the entire tech industry, calling it the successor to the mobile internet.

‘But you can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it,’ he continued.

‘And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage, like dancing, for example, or different types of fitness.’

The Facebook CEO says his vision – which he has been working on for several months – would not only reach into virtual reality, but augmented reality, computers, mobile devices and game consoles as well.