Meta Reports Loss of $10.2B on Augmented/Virtual Reality Operations in 2021

Meta Platforms lost $10.2 billion in 2021 on its newly created Facebook Reality Labs (FRL) division, which comprises its augmented and virtual reality operations, according to its fourth-quarter earnings report.

• Meta announced in the third quarter it would be breaking out results for the division for the first time to show the performance and investments in a group that it considers key to the next generation of online social experiences. The company even changed its name from Facebook to Meta Platforms in October to emphasize the importance of the metaverse to its future.
• FRL generated $2.3 billion in revenue in 2021, a small fraction of the almost $116 billion generated from Meta’s family of apps, which include Facebook, Instagram and WhatsApp. In Q4, FRL reported a loss of $3.3 billion on revenue of $877 million. That was up from a loss of $2.6 billion on revenue of $558 million in the third quarter.
• Meta previously estimated FRL would reduce its overall operating profit by about $10 billion in 2021, and said it was committed to spending even more on the division for the next several years.
• Overall, Meta reported adjusted Q4 earnings per share of $3.67, falling short of the consensus analyst estimate of $3.85, according to FactSet, while revenue of $33.7 billion was just ahead of the consensus estimate of $33.4 billion. Meta's guidance for first-quarter 2022 revenue also fell short, coming in at between $27 billion to $29 billion, compared with analysts' expectations of $30.2 billion.
• Shares of Meta tumbled more than 20% in after-hours trading Wednesday following release of the results.
• The earnings follow Meta’s Jan. 31 announcement that it has axed its Diem stablecoin project, selling the project's assets and operations to Silvergate for $182 million in total.
• On the earnings call with analysts, Meta CEO Mark Zuckerberg said the company's metaverse developments include releasing a high-end virtual reality headset by the end of the year. Zuckerberg said Meta is also continuing to work on "Nazare," the company's first fully augmented reality glasses.
• The company also said on the call it expects FRL's operating loss to "increase meaningfully" in 2022.

This is a developing story and will be updated.

Read more: A Crypto Guide to the Metaverse

UPDATE (Feb. 2, 22:07 UTC): Added Facebook's guidance for Q1 2022 in fourth bullet point.

UPDATE (Feb. 2, 22:51 UTC): Added information from earnings call.