Meta’s Future is Clouded with Legal Woes and Declining Revenues

DW | Arthur Sullivan | Jan 12, 2023

Meta and the metaverse - Meta's Future is Clouded with Legal Woes and Declining Revenues

Image: Unsplash/Daniel Lincoln

Meta, formerly Facebook, is in crisis mode as value plummets in 2022. Weak revenues, regulatory woes, and costly metaverse bet are to blame. 2023 doesn't seem any better.

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  • Macro landscape: Companies worldwide have slashed advertising budgets in response to soaring inflation and rising interest rates.
  • Reality Labs:  Meta has continued to ramp up spending on its metaverse projects, worrying its investors in the process.
    • Meta has pumped tens of billions over the past few years into Reality Labs. At the quarterly earnings results in October, Meta revealed that losses from Reality Labs would grow "significantly" in 2023, having already reached close to $10 billion (€9.29 billion) by the end of September 2022.
  • Metaverse uncertainty: The spiraling costs and a growing sense of uncertainty around the future viability and use case of the metaverse has added to doubts about Meta's prospects in 2023 and beyond.
    • The company revealed last year that capital spending could be as high as $39 billion in 2023, as it seeks to intensify its investment in Reality Labs and the metaverse. The company's shares fell by 25% in just one day when that news was revealed in October.
    • "There's a lot of potential there, but unfortunately getting it off the ground is astronomically expensive," Sophie Lund-Yates, an equity analyst with Hargreaves Lansdown, told DW. "What people are seeing is that actually you're pouring money into an unproven concept and there's not really any stringent plans around how things are going to work."

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