The metaverse revolution is far from over, and it’s not yet at its peak. The Motley Fool believes there’s more growth in the industry than we know of. For that, it’s strongly betting on Meta Platforms (META).
The metaverse is currently eclipsed by other emerging technologies, particularly artificial intelligence (AI). However, a huge potential in this niche is foreseen, especially in social media brands. Although it’s still far from realizing profits in its metaverse ventures, The Motley Fool thinks Meta’s “Family of Apps” will be a catalyst in the market after Meta Platforms poured huge funding into it.
Meta Operating on a Loss in Metaverse
Meta’s Reality Labs division is presently overseeing all of the company’s metaverse projects. It is responsible for the development and distribution of the Ray-Ban Meta smart glasses, Meta Quest VR headset, and the Horizon Worlds VR game.
Recently, the division embarked on the integration of AI in its products, and one of its pioneering outputs is the AI-powered voice assistant of the Ray-Ban smart glasses. It sure does have a lot on the table, but its financial sheets are saying otherwise.
Meta CEO Mark Zuckerberg stated before that he is looking to roll out its metaverse products and services to one billion people on the planet. But then again, only 20 million units of Meta Quest have been delivered to buyers so far by the end of 2023’s first quarter.
Further examination of the accounts of Reality Labs reveal a mind-blowing operating loss of $11.5 billion compared to its $825 million revenue in the past nine months of the year.
“For Reality Labs, we expect operating losses to increase meaningfully year over year,” admitted Meta CFO Susan Li.
A Flicker of Hope for Meta Platforms
Despite the disappointing figures, Meta Platforms is not showing any signs of slowing down on it ambitions. The Motley Fool said the massive scale of the company puts it at an advantage in doubling down on technologies that others fear to tread.
Thanks to its money makers or Family of Apps consisting Facebook, Instagram, WhatsApp, and Messenger, Meta can keep on coming up with ways on developing its metaverse applications. Its mentioned flagship apps continue to attract more users from time to time, and right now, it has displayed 7% YoY increase to 3.14 billion.
The continued growth in the user base of Meta Platforms contributed to 99% of its revenue with the last quarter data indicating a 52% operating margin.
The Motley Fool advised owning META for a long play. Even though its Reality Labs seems to be a lost cause, the Family of Apps of Meta Platforms gives the company a lot of money to burn to offset its metaverse losses. So, even if its meta ambitions eventually hit the fan, a margin of safety exists for investors.