As of October, Facebook has changed its name expressed a vision of the internet. People may communicate digitally through virtual-reality avatars or travel to see sites like ancient Rome, which triggered the metaverse investment boom.
Investors will receive a new glimpse into the financial implications of CEO Mark Zuckerberg's current interest when the business, called Meta Platforms Inc, releases fourth-quarter statistics on Wednesday.
For the first time, Meta expects to disclose the findings of its Reality Labs mixed and virtual reality hardware subsidiary, an expenditure the firm previously warned would cost it $10 billion in 2021 profit and will not be profitable "any time soon."
To prepare for the metaverse, the company will hire engineers and acquire multiple virtual reality gaming studios. The metaverse is a broad high-tech concept of shared virtual realms that can be accessed via various devices, and Zuckerberg believes it will be the successor to the mobile internet.
According to analysts, analysts want to see indicators of the Reality Labs division's profitability, how long it will be a strain on advertising, and proof of the strength of VR headset sales.
"Not having to surgically delve through Facebook earnings and just seeing a lens into the Reality Labs will be enormous for me as an analyst," stated VoxPop VR market analyst Stephanie Llamas.
Meta has stated that non-advertising income will be down year over year in the fourth quarter, citing the "strong launch" of its VR Quest 2 headsets during the previous year's holiday shopping season as an example.
The business hasn't revealed sales figures for the Quest headsets, but a recall notice for the Quest 2's facial foam liners in July stated that around 4 million devices in the United States were affected. The Oculus software was the most popular online iPhone app on Christmas Day in the United States, indicating significant sales of the headsets throughout the holiday season.
Investors will be most interested in how Meta's core digital advertising business is doing after the internet giant announced in October that the fourth quarter would be "significantly uncertainty."
Apple Inc's privacy rules have made it difficult for advertisers to focus and measure their advertisements on Meta's social media platforms, Facebook and Instagram, according to the firm, which owns the world's second-largest digital ad platform after Alphabet Inc's Google. Analysts said Meta had set a low bar for future profitability, but there were still doubts about these consequences and issues relating to the COVID-19 epidemic.
According to Evercore ISI analyst Mark Mahaney, "the Apple monitoring adjustment certainly had a negative impact on Facebook in the September quarter." "The question is whether they were able to manage that risk further... or whether it grew larger?"
Pedro Palandrani, a research analyst at Global X, the metaverse is the "long-term story." However, investors should watch how Meta handles Apple's policy and e-commerce improvements and methods to monetize messaging or services like its short video offering, Reels, in the immediate term.
Meta, which forecasted $86 billion in sales for 2020, has yet to clarify how it plans to profit in the metaverse. In November, it highlighted potential prospects for marketers, ranging from immersive stores to hosting paid mixed-reality events. At a virtual roundtable next month, the company has invited a group of advertising executives to discuss its brand shift and metaverse goals.
According to Wall Street projections, Meta is projected to report revenue of $33.38 billion, up 18.9% year over year, and quarterly profits per share of $3.84, a slight decrease. Total expenditures in 2021 are expected to be in the range of $70 billion to $71 billion, with full-year spending in 2022 expected to be in the range of $91 billion to $97 billion.
Featured image: Meta
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