Financial markets are not impressed by Meta’s marvellous Metaverse

“Meta’s shares tumbled 25 percent on Thursday (27 October) after the company revealed that losses from Reality Labs, its division that is building the Metaverse, would grow ‘significantly’ in 2023, after reaching US$9.4-billion in the first nine months of this year,” the Financial Times said.

“Investors were also startled by another jump in capital spending that Meta said would consume as much as $39-billion next year, more than double the level of 2021.”

Would shareholders have fired Zuckerberg?

The publication reported on comments from several senior financial industry figures, who noted that if Zuckerberg did not have the majority control of the business that he has, he would almost certainly have been fired as CEO by Meta shareholders.

Jim Tierney, Chief Investment Officer for US growth at AllianceBernstein, a Meta shareholder, is quoted as saying that mush of the unhappiness has stemmed from Meta’s failure to give any timetable for when the spending binge might pay off. “They’re spending $15-billion a year on the Metaverse and they can’t give us any mile-markers. It’s just a big hope,” he said.

But some tech investors believed Zuckerberg might be justified in pushing aggressively, given the scale of the risk his company is facing. 

Kevin Landis, President and Chairman of US-based Firsthand Funds, said Apple’s move to limit the data that its apps can collect on its devices severely dented Meta’s advertising revenue and appeared to have convinced Zuckerberg that he had no choice but to go all-in on trying to build the next important [Metaverse] computing platform.

What does the African marketing community think of the Metaverse and its future implications? Read more in Issue 3 2022 of Strategic Marketing for Africa, the magazine of the African Marketing Confederation. You can find it here.