Meta Metaverse Unit Has Lost $5.7B This Year

Meta CEO Mark Zuckerberg said its metaverse ambitions represent a “very expensive undertaking,” but he sees trillions in unlocked value

article-image

Facebook CEO Mark Zuckerberg | Source: Shutterstock

share

key takeaways

  • Meta’s overall quarterly revenue fell for the first time to $28.8 billion, missing estimates of $28.9 billion
  • Reality Labs, the social media giant’s metaverse division, saw second-quarter sales sink 35% to $452 million

Meta and its CEO Mark Zuckerberg might be bullish on the metaverse, but their pivot into virtual reality has so far weighed heavily on its balance sheet.

Meta reported a second-quarter loss of $2.8 billion in its Reality Labs division on Wednesday, adding to a $2.9 billion loss in this year’s first quarter.

Indeed, Reality Labs has lost $5.7 billion for Meta this year. And last year, it posted an annual loss of $10.2 billion, bringing combined losses to almost $16 billion.

The division, which is in charge of producing metaverse-related technology such as virtual reality (VR) hardware and software, posted quarterly sales of $452 million. That’s a nearly 35% drop from the second quarter.

Facebook changed its name to Meta in October last year to capitalize on the anticipated metaverse trend. Zuckerberg remains positive about the long-term outlook.

In the company’s earnings call Wednesday, he said artificial intelligence is the key driver of Meta’s business moving forward, followed by the emergence of the metaverse. According to him, the segment is still a solid opportunity as it enables “deeper” social experiences irrespective of where people are and expects the sector to unlock “trillions of dollars” over time. 

“This is obviously a very expensive undertaking over the next several years,” Zuckerberg said. “But as the metaverse becomes more important in every part of how we live from our social platforms and entertainment to work and education and commerce, I’m confident that we’re going to be glad that we played an important role in building this.”

Meta revenues disappoint but daily active users beat expectations

Meta’s total revenue for the quarter dropped 1% to $28.8 billion, missing expectations of $28.9 billion. 

This was reportedly its first-ever quarterly revenue decline in the 18 years since the tech titan’s inception. The company cited recessionary fears and competition weighing on its digital ad sales as reasons why.

After disclosing second quarter results, Meta’s stock fell 4.6% in after-hours trading to $161.70 a share on Wednesday, and shed another 1% in pre-market trading Thursday. Its stock is down 52% in the year-to-date, per TradingView data.

Meta expects third-quarter revenue from its Reality Labs segment to be even lower than the second quarter.

The Menlo Park firm projected overall revenue for the third quarter to be between $26 billion and $28.5 billion, lower than expectations of $30.32 billion. Meta’s daily active users, however, came in at 1.97 billion, beating estimates of 1.95 billion.

Slumping revenue isn’t the only problem Meta is dealing with. On Wednesday, the Federal Trade Commission sued to block the Facebook parent from acquiring VR company Within, accusing it of illegally attempting to “conquer” the virtual reality and metaverse industries. 

Learn more: Can GameFi Still Unlock the Metaverse?


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens