Meta, the parent company of Facebook, lost $2.81 billion on $452 million in revenue from its virtual reality branch, Reality Labs, for the quarter ending in June. On Wednesday, the company anticipated a second straight quarter of declining revenue.
The huge amount is the most recent indication that CEO Mark Zuckerberg and Meta continue to invest heavily in developing virtual reality and augmented reality products, as well as the so-called "metaverse."
A company that produced $8.36 billion in operating profits on $28.82 billion in total sales during the quarter can afford this expense.
Zuckerberg and other Meta executives believe that virtual and augmented reality head gears will be the dominant next-generation computing tech and are willing to pour in a huge amount of money in technologies that may not be released for several years.
Zuckerberg also said the company is willing to invest in technical experts, in order to compete with Apple, Google, Microsoft, and other companies eying the industry.
The Quest 2 headset from Meta is now the most popular virtual reality (VR) headset on the market, while the market remains relatively limited. Meta announced earlier this week that the price will increase from $299 to $399.
Later this year, Meta hopes to produce more advanced goggles that utilize front-facing cameras to "pass through" the real world to the user within the headset.
Meta has also invested in the acquisition of VR companies and startups developing key headset technologies. However, the FTC sued them on Wednesday to prevent them from acquiring the developer of the popular virtual reality (VR) application Supernatural, warning that future acquisitions will be subject to regulatory scrutiny.
In the company's earnings call for the first quarter, Zuckerberg stated that the company's metaverse division is "building the groundwork for a very prosperous 2030s."
According to FactSet, Meta's adjusted quarterly earnings per share for Q2 of $2.46 fell short of analysts' average estimate of $2.54, while its overall revenue of $28.8 billion fell short of estimates of $29.1 billion.
Last fall, when Zuckerberg changed Facebook's name to Meta, he refocused the company's entire philosophy on dominating the metaverse: an immersive, future version of the internet navigated by digital avatars that the CEO believes will become central to commerce, work, entertainment, and social interaction.
Wednesday's after-hours trade saw Meta's stock fall close to 4 percent to $163.25 as a result of the company's results. Facebook's stock price has declined by more than 50 percent this year.
