Prediction: Pivoting Away From Metaverse Will Help Meta's Stock Long Term

Core Viewpoint - Meta Platforms is discontinuing its virtual reality platform Horizon Worlds, indicating a shift away from its unsuccessful metaverse strategy [1][2]. Group 1: Financial Impact - Horizon Worlds was a significant part of Meta's metaverse strategy, but it failed to gain traction, leading to nearly $80 billion in losses for the Reality Lab division since 2020, including over $6 billion in the last quarter [2]. - The discontinuation of Horizon Worlds is expected to reduce losses from the division, which would enhance Meta's overall profitability [3]. Group 2: AI Development - Meta has invested heavily in AI infrastructure and talent, but its new Avocado AI model has faced delays due to underperformance compared to competitors [4]. - There is a suggestion that Meta could benefit from outsourcing its AI development to companies like Alphabet, which could reduce capital expenditures and improve free cash flow [7]. - The company has effectively utilized AI in its core business, enhancing user engagement and providing tools for advertisers [6]. Group 3: Long-term Outlook - By pivoting away from the metaverse, Meta is expected to improve its stock performance in the long run, as it can focus on its strengths in monetizing its user base [8].