RIP Zuckerberg’s Metaverse Dream?

2 min read

Meta, the company formerly known as Facebook, suffered its biggest one-day wipeout ever last week as its stock plummeted 26% and its market value plunged by more than $230 billion.

The crash followed a dismal earnings report, when chief executive Mark Zuckerberg outlined how the company was navigating a tricky transition from social networking toward the so-called virtual world of the metaverse

This is the first time Meta has reported its financial results in two segments — the Facebook Family of Apps that includes Facebook, Instagram, Messenger, WhatsApp and other services; and Reality Labs, which has augmented and virtual reality-related consumer hardware, software and content.

Of its total revenue of $33.67 billion, the Reality Labs segment accounted for only $877 million, suggesting a long path ahead in the company’s pivot to its metaverse aspirations.

On Thursday, a company spokesman reiterated statements from its earnings announcement and declined to comment further.

“Waste of Time” for Facebook Slams Twitter Founder Jack Dorsey

Since its launch in 2019, the Diem project, formerly named Libra, has encountered a cold response from regulators. Originally, the project was envisaged as a stablecoin, based on a basket of national currencies, that could serve as a global currency. A backlash from regulators over the currency’s proximity to Facebook even led to the name change from Libra to Diem, a bid to demonstrate “organisational independence”.

Earlier this week, Meta finalized the sale of its digital currency project Diem which has been plagued by regulatory pushback since its inception. The bank holding company, Silvergate Capital, will acquire all of Meta’s Libra-based assets, putting the final nail in the coffin for the project.

Unsurprisingly, Twitter founder and former CEO Jack Dorsey has slammed their competitor, with Meta (formerly Facebook) taking the hit for its “wasted effort and time” not embracing Bitcoin. 

Those two or three years or however long it’s been could’ve been spent making Bitcoin more accessible for more people around the world.

Jack Dorsey, Founder of Block

Dorsey is an avid Bitcoin supporter who has made the asset (BTC) a focus of his newer, shinier company, Block. 

Zuckerberg Investing In Metaverse While Augmented and VR Reality Labs Pulls Stocks

Zuckerberg is so confident that the internet’s next era is the metaverse — a still fuzzy and theoretical concept that involves people moving across different virtual- and augmented-reality worlds — that he is willing to spend big on it.

So big that the spending amounted to more than $10 billion last year. Zuckerberg anticipates spending even more in the future.

As per Meta’s Earnings Report, it is still highly profitable generating nearly $40 billion in profit last year, mostly from advertisements. However, it is also losing billions on Reality Labs, which is responsible for the Quest VR headset, VR software, and upcoming AR glasses, as well as other initiatives associated with the metaverse. 

The Reality Labs Division lost $10.2 billion and reported $2.3 billion in revenue last year – a figure that includes sales of the Quest and its shares of VR app purchases. Although Meta hasn’t disclosed the number of sales for Quest, third-party estimates place the number around 10 million.

However, it is yet to be seen whether Zuckerburg’s bet will pay off. 

Is Facebook Uncool Now? Losing Young Users Today In Its 18-Year History

Since its inception, Facebook’s user growth has essentially been up and to the right. But last week, it reported its first-ever quarterly decline in daily users, along with lower-than-expected ad growth that sent its stock crashing roughly 20 percent.

The huge stock drop, which immediately reduced Facebook’s market value by $200 billion, shows that its rebranding as Meta isn’t enough to distract investors from the core problems facing its social media business. Not only was user growth across Facebook, Instagram, and WhatsApp essentially flat last quarter, but the main Facebook app lost 1 million daily users in North America, where it makes the most money through advertising. That drop led to an overall decrease in daily users of Facebook globally, which a company spokesperson confirmed is the first sequential decline in the company’s history of 18 years.

That drop to 1.929 billion daily users from 1.93 billion the prior quarter is likely a reflection of Facebook’s increasing lack of relevance with young people

Web 2.0 vs. Web 3.0 : Transition From Centralized To Decentralized Blockchain and Crypto Metaverse 

While the centralized metaverse-focused firm faced rough seas nosediving by 26%, native tokens from decentralized counterparts in The Sandbox (SAND) and Decentraland (MANA) jumped 17.5% and 20%, respectively. Chairman and co-founder Yat Siu of Animoca Brands commented on the news, saying it was part of a broader trend where Web2 talent and users are shifting to the open world of Web3.

Is this the beginning of an end to Mark Zuckerberg’s Metaverse dream?

Stay on top of Crypto Trends

Subcribe to our newsletter to get the latest crypto news in your inbox