$45 Billion Down the Drain: A Promising Metaverse Turns into a ‘Financial Disaster’ for Meta

Four years after Mark Zuckerberg renamed Facebook✴ Meta✴ to realize his vision of the metaverse, the company has spent $45 billion on the project. But the results so far seem dubious, with critics calling the initiative a “financial disaster.”

Image source: Muhammad Asyfaul / Unsplash

According to TechSpot, the metaverse project has become a financial sinkhole, having swallowed up $45 billion by early 2025. That’s nearly the combined market cap of Meta✴ competitors Snap and Pinterest, or what Elon Musk paid to acquire Twitter. In last year’s earnings call, Zuckerberg warned that the losses would “increase significantly,” without specifying what he meant.

Yahoo Finance spoke with more than a dozen former executives at Meta✴ Reality Labs, the division responsible for developing augmented reality (AR) and virtual reality (VR) technologies. They described the division as “dysfunctional and disorganized.” Frequent management changes and constant changes to the structure, they said, only exacerbated the chaos. Many managers were transferred from other parts of Meta✴, despite lacking the necessary AR and VR expertise.

«“The work environment was extremely unstable,” said one former research employee, who said Instagram✴ top employees were promoted to leadership positions on VR teams without any experience. The resulting mix of incompetent leadership and unclear product strategy was one of the main reasons for the division’s massive losses.

Financial reports, however, show that the Reality Labs division’s losses have increased sharply over the past few years: more than $6 billion in 2020, $10 billion in 2021, $13 billion in 2022, and $16 billion in 2023. The division also lost another $3.8 billion in the first quarter of 2024, exceeding its combined revenue for 2022 and 2023.

Image Source: Yahoo Finance

Despite rising expenses, the unit’s annual revenue has declined since 2021 due to weak sales and a failure to reach a mass audience. Gene Munster, a Wall Street analyst at Deepwater Asset Management, said the unit is unsustainable and is dragging down Meta’s shares.

While some investors remain patient, betting on the long-term potential of AR and VR, their optimism is beginning to fade. Without rapid mass adoption, the $10-15 billion annual cost of Zuckerberg’s “metaverse dream” is clearly becoming unsustainable.

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