Metaverse division’s $4B loss drags on positive first quarter for Meta

Zuckerberg expects Reality Labs operating losses to increase year-over-year in 2023.

Meta suffered a nearly $4 billion loss from its metaverse unit with Reality Labs in what was otherwise a solid first quarter for the Mark Zuckerberg-led social media empire which posted a final profit of $5.7 billion.

While the $4 billion loss follows a $14 billion loss in 2022, Zuckerberg explained in the earnings report that Reality Labs will likely suffer more losses in the remainder of 2023.

“We continue to expect Reality Labs operating losses to increase year-over-year in 2023,” predicted Zuckerberg.

The losses suffered by Reality Labs were however negated by the firm’s developments in its artificial intelligence (AI) segment, the firm’s chief executive explained.

“Our AI work is driving good results across our apps and business. We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long-term vision.”

While Zuckerberg recently labeled AI as the firm’s “single largest investment,” he said Meta’s metaverse ambitions remain a top priority for the firm.

“A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say up front that that’s not accurate.” he said before adding, “we’ve been focusing on both AI and the metaverse for years now and we will continue to focus on both.”

In addition, Zuckerberg explained that metaverse tech will help its AI visions and vice versa.

“Metaverse technology will also help deliver AI as well. For example, embodying AI agents will take advantage of the deep investment that we’ve made in Avatars over the last several years.”

Related: Zuckerberg’s $100B metaverse gamble is ‘super-sized and terrifying’ — Shareholder

Zuckerberg explained in a Feb. 28 Facebook post that the firm is building a suite of creative and expressive tools that can help “turbocharge” the efficiencies of some of its existing products:

“Over the longer term, we’ll focus on developing AI personas that can help people in a variety of ways. We’re exploring experiences with text (like chat in WhatsApp and Messenger), with images (like creative Instagram filters and ad formats), and with video and multi-modal experiences.”

Though Zuckerberg stated the firm has “a lot of foundational work to do” before it can provide “really futuristic experiences” for its audience.

Meta stock bounced 11.7% after hours following the news of its better-than-expected first quarter, according to Google Finance:

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