Facebook’s parent company, Meta is focusing on investing heavily into its metaverse project, but relies largely on advertising revenue for practically all of its income.
After the company, formerly known as Facebook, presented a harsh revenue forecast and scourging costs, investors freaked out and instantly dropped the company’s valuation by nearly $200 billion.
As per World Bank estimates, Meta’s shares stooped by 22.6% to $249.90 in after-hours trading, suspecting a massive drop in the company’s overall value, referred to as its market capitalization, larger than that of entire Greek economy if the drop prevails until the market reopens.
The company’s futuristic metaverse project is based on the idea of internet brought to life or rendered in 3D by developing a “virtual environment”, as Meta CEO Mark Zuckerberg likes to call it.
The virtual environment allows users to immerse themselves rather than simply engaging with the screens and in theoretical senses, the metaverse will be an unreal/virtual space where people can meet, work or play with the help of VR headsets, AR glasses, smart apps or other devices.
However fancy, building metaverse is an expensive project, for which Meta has already invested over $10 billion into Reality Labs which consist of VR headsets and AR technologies, ultimately causing severe decline in profits.
Moreover, the tech giant also ramped up hiring with the objective of expanding its workforce by 23% and gathered a total employee strength of 71,970 people by end of last year.
Apparently, the company is now bracing for a below-expectation revenue in the ongoing quarter due to challenges and pressures of power struggle among competitors like TikTok and other platforms grabbing people’s eye.
Adding to its challenges, Meta is addressing a new challenge after Apple introduced new privacy updates restricting companies like Meta from tracking people as a part of its advertising strategy.