Wall Street is growing impatient with Mark Zuckerberg, the CEO of Meta (META.O), over his massive and risky bets on his metaverse project, which contributed to an increase in the company’s total costs of 5% in the third quarter.
After trading hours, investors raced to sell Meta Platforms Inc.’s shares, driving it down 20% and erasing $67 billion off the company’s market worth after it reported its fourth consecutive quarter of declining quarterly earnings.
The Facebook-parent company warned that its overall costs might increase by as much as 16% in the upcoming year and predicted that Reality Labs’ operational losses, which are what created the metaverse, “will climb dramatically.”
The company’s investments, according to one Meta stakeholder, are “super-sized and scary.” On Wednesday, analysts described them as “confusing and bewildering” and referred to Meta’s inability to reduce expenses as “very troubling.” On a post-earnings conference call, Jefferies analyst Brent Thill asked executives: “I think kind of summing up how investors are feeling right now is that there are just too many experimental bets versus proven bets on the core … I think everyone would love to hear why you think this pays off.”Losses at Reality Labs increased dramatically in the July-September quarter, rising from $2.63 billion to a staggering $3.67 billion. Income virtually fell in half.
“It would be a mistake for us to not focus on any of these areas that will be fundamentally important to our future,” Zuckerberg said on the call.