The financial results for the first quarter of 2022 have fallen. For Meta, they caused a (slight) change of course, with a drop in investment in virtual and augmented reality, which weighed down the group’s accounts. Also attacked on its business model (online advertising), Mark Zuckerberg’s group is more than ever at a crossroads. But the billionaire has chosen to bet everything on the metaverse, and he will not change his tune, except in a cataclysm.
This is undoubtedly one of the big questions agitating global tech: has Mark Zuckerberg chosen to redirect Meta activity (ex-Facebook) towards virtual and augmented reality solely out of conviction in the future of these technologies, or because he knows, deep down, that his advertising business model, relying heavily on the collection of personal data, will not last forever?
Mark Zuckerberg puts the future of Meta in the balance of virtual and augmented reality
Of course, the most likely is that both answers are valid at the same time. Mark Zuckerberg even intends to make all the money possible from the resale of personalized profiles, down to the last penny that the legislation will allow him, while preparing for the future with his dear metaverse.
Anyway, the bet is total: it is the future of Meta that hangs in the balance. Since 2014, the group has swallowed up fortunes to now have a team of 18,000 people working in the development of virtual and augmented reality.
Growth up, but slower, profits still colossal, but down
Fortunately, Meta remains a very (very !) profitable. However, some shareholders are beginning to worry about this all in on the metaverse. Especially since the growth of the group is running out of steam. So Mark Zuckerberg will reduce his investments in virtual and augmented reality a little.
These are the main lessons the presentation of Meta’s financial results for the first quarterthis April 27, 2022. The group indeed recorded 27.9 billion dollars in turnover over the period, an increase of ” only “ 7% – the lowest rate since going public in 2012.
Profits remain colossal, at $7.5 billion, but are down 21% compared to the first quarter of 2021. In other words: Meta still has growth that any entrepreneur would dream of, and an unbeatable rate of profit.
The Meta empire weakened by Apple, TikTok and regulators
But the Meta empire seems more fragile than ever. Apple has thus implemented App Tracking Transparency, which prevents the use of advertising cookies by default, and which has already caused Meta to lose at least $10 billion in revenue in less than a year.
At the same time, young users of social networks are increasingly caught up in TikTok, thereby reducing group income on a priority target. In addition, regulators, European and American, are not giving up: Meta anticipates spending around a billion dollars in fines, and risks seeing its advertising revenues cut even further. by legislation that is ever more favorable to privacy.
Finally, the war in Ukraine has affected the online advertising market. The painting could seem apocalyptic. But remember that Meta did generate a PROFIT of $7.5 billion over the quarter! What’s more, Facebook’s user numbers are on the rise again, Instagram is doing quite well, and the Reels are generally a success.
Meta cuts its investments in virtual and augmented reality by $3 billion for 2022
Enough to wait until the virtual and augmented reality market becomes profitable, by 2030 for Mark Zuckerberg. The results for the last quarter, however, suffered from the $2.96 billion in expenditure by Reality Labs (the group’s virtual and augmented reality division), for only $695 million in revenue.
The fact remains that after having invested 10 billion dollars in Reality Labs in 2021, Mark Zuckerberg, who had announced a new increase in investments in this sector for this year, conceded to shareholders a reduction in expenditure for Reality Labs of 3 billion dollars. in 2022.
Enough to announce future beautiful arm wrestling between the omnipotent boss of Meta, determined to win his AR / VR bet in the long term, and his shareholders, who prefer good profits in the short term…
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Meta will limit its investments in virtual and augmented reality
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