Facebook, formerly known as Meta Platforms Inc (NASDAQ:FB), is to publish its results on Wednesday, with particular focus on its metaverse investment aspect of the company.
Meta will reveal the financial impact of its augmented and virtual reality (VR) hardware unit, Reality Labs, for the first time in its fourth-quarter results, Reuters said.
The metaverse is a futuristic network of 3D virtual worlds, whereby users can create avatars that can explore and connect with other avatars, which Meta’s chief executive and founder believes will be the successor to the mobile internet.
Mark Zuckerberg previously warned the metaverse investments would dent its 2021 profit by US$10bn, as well as admitting it would not be profitable “any time in the near future.”
The company, which set expectations low for its results according to analysts, is yet to outline how it plans to be earnings-accretive in the virtual world but did suggest potential opportunities for brands using its platform.
Virtual fines to add to real ones?
The social network titan has already received fines for ‘data mining’ amounting to billions of dollars.
One chief executive of a metaverse development company thinks the metaverse will simply see the extension of such problems into the new, increasingly immersive arena.
“The only way to really monetise a metaverse such as Facebook's Meta is via the users… and the only way to get that is to mine that data,” Dorian Banks, chief executive of Looking Glass Labs CEO, an NFT marketing firm digital agency that specialises Metaverse, told Proactive.
Fake world problems: How data mining, online trolls, and age-control will challenge the metaverse economy (read more).
The tech giant, which was renamed Meta in October, is hiring engineers and buying virtual reality gaming studios to help build its metaverse.
Analysts said they would be keen to see indicators about the Reality Labs division's profitability, how long it might be a drag on the advertising side, and hard evidence about how well its Oculus VR headset is actually selling.
Another issue for Meta, which has the second-largest digital advertising platform after Alphabet Inc (NASDAQ:GOOG)’s Google, is the row with Apple over the iPhone maker’s new privacy laws.
The group has already warned that Apple’s privacy changes make it harder for brands to target and measure their ads on Meta’s Facebook and Instagram.
"The Apple tracking change clearly had a negative impact on Facebook in the September quarter," Mark Mahaney, Evercore ISI analyst, said.
"The question is, were they able to further mitigate that risk or did it become bigger?" he added.
The company will host ad executives in a roundtable next month to discuss its plans for the metaverse.
Overall, expect revenues of US$33.8bn from Meta for the quarter, according to a consensus of Wall Street estimates, around 19% up on the comparative period in 2020, while earnings per share of US$3.84 are expected – a minor fall.
Meta also anticipates outgoings of US$70-US$71bn but expects this to climb to US$91bn-US$97bn in 2022.
Non-advertising revenue will be down year-on-year, analysts said.