Making super money: The parent company Facebook lifts the curtain on business in the virtual world – National

Since October, Facebook changed the company name, articulating a vision for the Internet where people could digitally connect through virtual reality avatars or teleport to see places like ancient Rome and help enable reverse investment fever.


When the company, now Meta Platforms Inc, reports fourth-quarter results on Wednesday, investors will get a new chance at the financial impact of CEO Mark Zuckerberg’s current passion.

Meta plans to release the results of its virtual and augmented reality hardware unit, Reality Labs, for the first time, an investment the company warned earlier would generate $10 billion in profits for the company. through 2021 and won’t be profitable “anytime in the foreseeable future.”

The company is hiring engineers and buying multiple virtual reality gaming studios to build towards the supermarket, a vast futuristic concept of shared virtual realms that can be accessed through other devices. each other, and Zuckerberg is betting to be the successor to the mobile Internet.

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Analysts said they’ll want to see the profitability metrics of the Reality Labs division, how long the advertising drag is, and the evidence surrounding the strength of VR headset sales.

“That would be huge for me as an analyst, not having to dig into Facebook earnings… and just see the tube,” said VoxPop virtual reality market analyst Stephanie Llamas. Glasses of the Reality Laboratory”.

Meta said it expected non-advertising revenue to decline year-over-year in the fourth quarter as it compares unfavorably with the “strong launch” of the VR Quest 2 headset during the holiday shopping season. last year.

The company hasn’t announced sales numbers for the Quest headphones, but a July recall notice for the Quest 2’s foam face pads said it affected about 4 million units in the United States. In a sign of strong headphone sales during the recent holiday season, its Oculus app hit the top spot on the US App Store for free iPhone apps on Christmas Day.

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‘Significant uncertainty’

Crucial for investors, however, will be Meta’s core digital ad business, after the tech giant said in October that it faced “uncertainty”. significantly” in the fourth quarter.

The company, which has the world’s second-largest digital advertising platform after Alphabet’s Google, warns it could face continued impacts from Apple Inc’s privacy changes that make it difficult brands that are difficult to target and measure their ads on Meta’s social media services are Facebook. and Instagram. Analysts say Meta has set a low for its upcoming earnings, but questions remain about these impacts and on issues related to the COVID-19 pandemic.

Mark Mahaney, analyst at Evercore ISI, said: “Apple’s tracking change clearly had a negative impact on Facebook in the 9th quarter. “The question is, can they mitigate the risk? more… or does it get bigger?”

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Pedro Palandrani, a research analyst at Global X, said the metaverse is a “long-term story” but in the near-term investors will be looking to how the Meta navigates Apple’s policy and updates. e-commerce and ways to monetize messages or features like its short video offering, Reels.

Meta, which reports 2020 revenue of around $86 billion, has yet to explain in detail how it will make money in the metaverse. In November, it pointed to potential opportunities for brands, from rich stores to hosting paid mixed reality events. The company invited a group of advertising executives to discuss the rebranding and its plans for the metaverse at a virtual roundtable next month.

Meta is expected to report revenue of $33.38 billion, Wall Street estimates, up 18.9% year-over-year, and is expected to post quarterly earnings per share. was $3.84, a slight decrease. The company said it expects total costs in 2021 to be between $70 billion and $71 billion, and full-year costs of 2022 to reach $91 billion to $97 billion.

(Reporting by Elizabeth Culliford in New York Additional reporting by Sheila Dang in Dallas Editing by Kenneth Li and Matthew Lewis)

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