Chart: Meta’s Metaverse Bet Bleeds Billions in Money Pit

Meta reported fourth quarter and full year earnings on Wednesday that beat expectations across the board, despite the company continuing to invest heavily in two key initiatives that Mark Zuckerberg sees as critical for its future success: AI and Reality Labs, which encompasses virtual and augmented reality and the metaverse. While Meta’s AI efforts led to higher capital spending, which is expected to increase in 2025, the Reality Labs division is still operating at a loss.

In 2024, Meta’s Reality Labs division reported an operating loss of $17.7 billion, bringing total losses for Zuckerberg’s ambitious projects to nearly $70 billion over the past six years. Despite this, the division only generated $2.1 billion in revenue last year, highlighting the challenges Meta faces in making its virtual and augmented reality ventures profitable. Although Meta can afford to sustain these losses – thanks to the $87 billion in operating profit generated by its Family of Apps division – it is simultaneously pursuing expensive projects like generative AI and AR/VR.

During an earnings call, Zuckerberg emphasized that 2025 will be a critical year in determining the trajectory of Meta’s long-term endeavors. He stated, “This will be the year when we understand the trajectory for AI glasses as a category. This will be a defining year that determines if we’re on a path towards many hundreds of millions and eventually billions of AI glasses – and glasses being the next computing platform like we’ve been talking about for some time – or if this is just going to be a longer grind.”

Regarding the funding of these major projects, Zuckerberg outlined a strategy to leverage AI advancements to drive revenue growth, such as making content recommendations more engaging and enhancing ad efficiency by using advanced models to target ads more effectively.