Mark Zuckerberg rebranded Facebook for the metaverse. Four years and $70 billion in losses later, he’s moving on

Core Insights - Meta's ambitious pivot to the metaverse has resulted in significant financial losses, with Reality Labs incurring over $70 billion in losses since 2021, primarily due to underwhelming user engagement and high operational costs [2][3] - The company is now planning to cut Reality Labs' budget by 30%, which could mean a reduction of $4 billion to $6 billion in spending, affecting various projects including Horizon Worlds and Quest hardware [4][5] - Following the announcement of budget cuts, Meta's stock saw a positive reaction, increasing by over 4% and adding approximately $69 billion in market value, indicating investor approval of the strategic shift [6] Financial Performance - Reality Labs has accumulated losses exceeding $70 billion since 2021, attributed to investments in virtual environments and hardware that have not yielded a substantial user base or revenue [2] - The planned budget cuts of 30% could translate to a reduction of $4 billion to $6 billion, reflecting a significant shift in financial strategy [4] Strategic Shift - Meta is reallocating resources from the metaverse to focus on AI technologies, particularly smart glasses, which have seen a tripling in sales over the past year [7] - The decision to cut the budget for Reality Labs follows a broader strategy meeting where executives were instructed to find 10% cuts across all divisions, indicating a company-wide reassessment of priorities [5]