Mark Zuckerberg said he's "slowing the pace" of investment in new projects at Facebook, including the metaverse.
Reality Labs, the division overseeing development of the metaverse within Facebook, lost another $2.9 billion in the first quarter. In the final quarter of last year, the division lost $3.3 billion, shocking Wall Street. Concern about Zuckerberg's ambitions plans for the metaverse, imagined as an immersive 3-D world of avatars and digital goods entered into through VR devices, has only increased since then.
Zuckerberg seems to want to reassure investors that the metaverse isn't a money pit. During a conference call to discuss quarterly results, the founder and CEO said he wanted to "level set on our business trajectory." While he still sees projects like AI and the metaverse as important to the company's future and continued growth, he is "now planning to slow the pace of some of our investments."
He spoke specifically of Reality Labs on this front. "I know it's expensive to build this," Zuckerberg said. Now, the plan is to grow revenue from its core apps business, including Facebook, Instagram and WhatsApp, enough "to fund" investment in the metaverse and Reality Labs, he explained.
"That is not going to happen in 2022, but longer term, that is our goal," Zuckerberg added. "Our priority is for the long term but it's possible that prolonged macroeconomic headwinds would cause us to trade off for shorter term financial goals."
That was reassuring for investors. Shares of Facebook, now called Meta Platforms, jumped 18% in late trading on Wednesday.
Zuckerberg and CFO David Wehner spoke briefly about the impact Russia's invasion of Ukraine is having on its business, based almost entirely on advertising, along with ongoing effects of data privacy changes by Apple and regulation in Europe.
As for the metaverse and when it will have a more positive impact on Facebook's business and not be such a major expense, Zuckerberg admitted that day is a long way off.
"It's going to be longer than for Reality Labs compared to a lot of the more traditional software we've built," he said. The company is still hiring for the division and has new teams working on products that are two or three releases into the future, leading to higher expenses, he said.
"It's not going to be until the market is big that this will be a revenue or profit driver," Zuckerberg said. "It's laying the groundwork for what I expect will be a very exciting 2030s."
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