An avatar of Mark Zuckerberg, chief executive officer of Meta Platforms Inc., speaks during the virtual Meta Connect event in New York, US, on Tuesday, Oct. 11, 2022.
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Meta CEO Mark Zuckerberg keeps racking up losses from his metaverse investments while downsizing his social media company through cost cuts.
In its first-quarter earnings report on Wednesday, Meta said its Reality Labs unit, which is tasked with building the virtual reality and augmented reality technologies for the futuristic metaverse, recorded a $3.99 billion operating loss.
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The unit generated $339 million in revenue during the quarter, a minuscule sum for a company that brings in tens of billions of dollars a quarter in advertising sales.
The loss did narrow, however, from $4.28 billion in the previous quarter on $727 million in revenue.
For all of last year, Reality Labs recorded an operating loss of $13.72 billion on $2.16 billion in sales, underscoring how VR and AR technologies have yet to reach the mainstream.
Zuckerberg has touted 2023 as the company’s “year of efficiency” and has implemented major cost-cutting initiatives that include layoffs targeting an expected 21,000 employees.
But while the company slims down, it’s still pumping billions of dollars into the metaverse after changing its name from Facebook to Meta in late 2021.
Data provided to CNBC by research firm NPD Group showed that sales of VR headsets in the U.S. declined 2% year over year as of early December 2022.
In March, Meta cut the price of its Quest 2 VR headset as well as the high-end Quest Pro. The Quest 2 now costs $70 less than before, selling for $430, while the price of the Quest Pro was reduced by $500 to $1,000.
Watch: Investors should look for Meta’s ad revenue in earnings
