Mark Zuckerberg prepares investors for more metaverse losses

Mark Zuckerberg prepares investors for more metaverse losses

Meta’s investors must be long-term oriented. Very long-term oriented.

At an annual meeting, Meta CEO Mark Zuckerberg prepares his shareholders for a long Metaverse test of patience: For another three to five years, the project is expected to lose significant money. Some products may not be ready for another 15 years.

“At the end of the decade, it will hopefully be clearer how this will result in a positive ROI for the company,” Zuckerberg says.

The Facebook inventor has already been investing many billions of dollars in VR and AR since 2014 in the hope that the technologies could one day become the basis for an even bigger billion-dollar business. Since last year, he has been pursuing the overarching Metaverse concept, which he himself describes as “ambitious.”

Investors have concerns about Metaverse – but Zuckerberg has the majority

Shareholders also called for the board to conduct a third-party assessment of the Metaverse project with regard to “potential psychological and civil and human rights harms to users that may be caused by the use and abuse of the platform,” and a subsequent vote with shareholders on how to proceed.

However, the board rejected this request – referring to existing research and cooperation projects with “numerous researchers, experts, and advocates around the globe.” The board mentions a research fund for these issues established in the fall of 2021 – budget: $50 million – and therefore felt the shareholder proposal was unnecessary.

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As long as Zuckerberg has plenty of allies on the board, like his mentor and major investor Marc Andreessen, and around 57 percent of the voting rights, Facebook’s Metaverse makeover is probably largely safe.

Zuckerberg’s risks: The Metaverse flops – or Apple rocks

Only a too-rapid financial collapse in its core online advertising business and the resulting loss of value on Wall Street could jeopardize Meta’s biggest pivot in Silicon Valley history. The fact that Zuckerberg has to react to a falling share price, on which salaries depend, for example, is shown by the recently reduced investments in Reality Labs.

And then there’s Apple: the tech giant reportedly plans to launch a first mixed reality headset in late 2022 or early 2023, which could compete directly with Meta’s next XR headset, Cambria. This comparison and the market’s reactions to the two devices could be trend-setting for the future.

The biggest risk of Meta is probably the metaverse bet itself: No one, not even Zuckerberg, knows exactly how the metaverse will develop and how it can be used to make money. Ideas and approaches abound, but only the future will show how valid they are and how media use will develop, especially among young people.

Sources: Meta, SEC