Facebook to invest heavily in metaverse after its ad business slumped

By Akshay Kedari  | Date: 2021-10-27

Facebook to invest heavily in metaverse after its ad business slumped

Facebook recently announced that it is planning to separate its division that is focused on VR/AR hardware into a new segment, coined as the “metaverse”. The recent development comes after concerns over social media giant’s ad business could drop due to Apple’s privacy changes.

Earlier this month, Facebook warned that Apple’s new privacy reforms could weigh on its ad business significantly during this quarter as the social media giant reported below expectations quarterly revenue.

For the record, Facebook reported revenue of USD 29.01 billion in the third quarter, up from USD 21.47 billion the previous year, but falling short of analysts' expectations of USD 29.57 billion.

The revenue was primarily made up of ad sales and it bore the brunt of Apple's new privacy rules, which made it more difficult for brands to target and measure their ads on Facebook.

It appears that this has compelled Facebook to focus on the metaverse by breaking out its hardware division, beginning the fourth quarter of 2021. Although analysts anticipate a 24.1% increase in fourth-quarter revenue, which could value Facebook at USD 24.84 billion, the social media company expects its

According to Facebook Chief Financial Officer David Wehner, the investment in the form of USD 14.37 billion in stock and USD 40 billion in shares in FRL will help in reducing the company’s operating profit to around USD 10 billion in 2021.

The world’s largest social media company is making this huge financial commitment to build a metaverse while facing allegations from former employee Frances Haugen, who claimed that the company prioritized profit over user safety.

Despite this, in volatile extended trading on Monday, the company's shares were up about 2% at USD 336. Facebook, whose stock has gained by about 20% this year, is about $85 billion away from regaining a spot in the USD 1 trillion club which consists of Apple, Tesla, and Microsoft.

Source credit:

https://www.aljazeera.com/economy/2021/10/25/facebook-pours-billions-in-metaverse-as-ad-business-falters

About Author

Akshay Kedari     aeresearch.net

Akshay Kedari

A qualified computer engineering graduate, Akshay Kedari takes pride in having his way with words. Following his passion for content creation, he writes insightful pieces on aeresearch.net and a few other portals. Also endorsed with a short-term experience in web deve...

Read More

More News By Akshay Kedari

Amazon Smart Commerce to digitize 10 million small businesses in India

Amazon Smart Commerce to digitize 10 million small businesses in India

By Akshay Kedari

E-commerce behemoth Amazon Inc. has reportedly launched a “Smart Commerce” initiative in India, aiming to digitalize 10 million small businesses, allow for USD 10 billion worth in exports, and create 2 million jobs by 2025. During the ...

McDonald’s to leave Russia after 30 years amidst Ukraine’s invasion

McDonald’s to leave Russia after 30 years amidst Ukraine’s invasion

By Akshay Kedari

After Ukraine’s invasion, multinational fast-food giant McDonald's Corp. is reportedly planning to sell all its restaurants in Russia, pulling operations from the nation after 30 years. The world's biggest fast-food chain closed 847 ...

Berlin’s GetHenry bags USD 17.4 Mn seed funding for business expansion

Berlin’s GetHenry bags USD 17.4 Mn seed funding for business expansion

By Akshay Kedari

GetHenry, a Berlin-based company that offers couriers and logistics organizations electric last-mile delivery bikes, has reportedly raised USD 17.4 million seed round to grow its operations across Europe. The latest investment round was led by LocalG...

Ferrari to equip the upcoming Purosangue with its trademark V12 engine

Ferrari to equip the upcoming Purosangue with its trademark V12 engine

By Akshay Kedari

Italian luxury sports car manufacturer Ferrari S.p.A. will equip its much-awaited Purosangue SUV with a 12-cylinder engine, as it focused more on fuel-efficient models. Confirming the news, Ferrari Chief Executive Benedetto Vigna claimed that the com...

White House to spend USD 3 billion on EV battery manufacturing in U.S.

White House to spend USD 3 billion on EV battery manufacturing in U.S.

By Akshay Kedari

According to reliable sources, the Biden administration is planning to provide USD 3 billion in finance to reinforce EV battery manufacturing capabilities in the United States. The apparent funds will be issued by the Department of Energy from Presid...