Expensive Metaverse: Meta Needs to Save

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The global economy is suffering from the consequences of the pandemic and the Ukraine crisis. The advertising market in particular is feeling the effects of this – and with it, Meta.

Since September 2021, Meta’s stock price has lost about a third of its value. Revenue growth has been less than analysts’ expectations for the past two quarters, and user growth has been low which is a controversial metric, as Meta doesn’t provide accurate data on things like fake account and bot activity.

The biggest hub in Silicon Valley history needs a few more years

Meanwhile, Meta has been investing billions of dollars in virtual reality and augmented reality technology for years. An investment that has not yet paid off and will not pay off in the foreseeable future: Meta President Mark Zuckerberg recently prepared investors for the fact that Metaverse sales will only show their full potential in 2030.

At an investor conference on sales numbers for the second quarter, the Meta president announced that investments in the Metaverse business in particular could be stifled in light of current business growth and that short-term financial goals could be prioritized.

With that last point, Zuckerberg will likely mean further growth in his core advertising business with Facebook, Instagram and WhatsApp, which fund the development of the Metaverse. “I know it’s expensive, this [Metaverse] Zuckerberg said in the call.

Meta has invested $3 billion in developing the XR at Reality Labs in the past quarter alone. These expenses are offset by sales of approximately $700 million.

Meta needs to rethink priorities – and hire less

A leaked internal memo by Meta CFO David Wehner supports Zuckerberg’s testimony. In light of recent business results, Weiner talks about the need for “targeted and balanced investments” that support key strategic priorities.


Weiner cites Apple’s advertising restrictions on iOS, the Ukraine crisis, a generally difficult macroeconomic environment, and rapid short-term growth during the pandemic years as reasons for the recent slowdown in sales growth.

As the first concrete measure, Weiner declares Less than originally planned settings at. This decision will affect “almost every team”. Wehner doesn’t provide exact numbers, but he does mention that Meta hired as many engineers in the first quarter of 2022 alone as it did in 2021 overall.

Weiner also touches on internal restructuring to strengthen the projects that will be prioritized this year. as a possible future growth engines Wehner calls monetization reels on Instagram, artificial intelligence in the advertising system to overcome iOS flaws, commercial messaging and the “realization of the metaverse”.

Meta must now act responsibly, as “unexpected market forces” have put pressure on its core business in recent months.

“We need to re-evaluate our priorities and make some tough decisions about which projects to tackle in the short and medium term to achieve the cost reductions we promised at the investor conference,” Weiner wrote.

Sources: Business Insider

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